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clarifies nationalization legislation
Tony Hawkins, Financial Times
March 11, 2008
international and local criticism of its new nationalization
legislation, Paul Mangwana, indigenisation minister, insisted
that not all foreign-owned firms would be forced to sell 51 per
cent of their shares to indigenous Zimbabweans.
Mr Mangwana said: "Not
every business would be forced to have 51 per cent indigenous ownership.
The Minister will prescribe on the basis of capital (investment)
and employment levels".
Although some businessmen
here have been quick to interpret his remarks as a climbdown, the
reality is that the legislation is full of discretionary provisions.
Critics say this is deliberate, as the main aim is to enable ministers
to "cherrypick" firms for takeover rather than a blanket
provision that the state could not afford to finance anyway.
One businessman who cannot
be named for fear of attracting unwelcome government attention to
his business, said: "The minister has hit the nail on the head.
He, or the Cabinet, will choose which firms to take over, and if
the businesses do not comply, then they will be told to whom they
must sell their shares and, probably at what price".
Although the main media
focus on the nationalization act has been its implications for foreign
owners, it applies to domestic non-indigenous owners as well. Although
it is not phrased in overtly racial terms, because this would contravene
Zimbabwe's constitution, an indigenous person is defined as one
who was disadvantaged under the pre-independence regime. The decision
of who was disadvantaged is left to the government, highlighting
the discretionary, rather than rule-based, content of the law.
In his response, the
president of Zimbabwe's Chamber of Mines, Mr Jack Murehwa insisted
that the minister's clarification had not helped. "A different
explanation outside the law cannot allay fears" he said. "The
most important thing is the form and content of the act."
Some managers of non-indigenous
and foreign-owned firms are already seeking to exploit the situation
by suggesting to owners and head offices that it might be better
to "sell" shares, usually at a substantial discount, to
people they know rather than risk having a partner thrust upon them
by the government, as threatened by Mr Mangwana.
It is unclear how the
issue is playing in the election campaign because while President
Mugabe is using the law to demonstrate his determination to ensure
that "Zimbabwe is for Zimbabweans," Mr Simba Makoni, the
president's challenger from within his ruling Zanu-PF party is keeping
quiet in public, partly because he is anxious to portray himself
as a supporter of the indigenisation strategy.
The main opposition party,
the Movement for Democratic Change, which strongly opposed the bill
in parliament, launched its policy manifesto in Harare on Tuesday.
It favors more foreign investment, promising to build "a strong
economy, using market principles with strong redistributive characteristics
and carefully-targeted state-intervention policies to promote economic
and social justice".
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