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PM disowns Kasukuwere public notice to mining companies: Not government
policy - Bill Watch 16/2012
April 06, 2012
Minister has released a statement
rejecting a public notice by the Minister of Youth Empowerment,
Indigenisation and Empowerment to “non-compliant” mining
Minister’s Public Notice
notice”, headed by the Zimbabwe coat of arms, appeared in
newspapers on 5th April as an advertisement over the signature of
the Minister of Youth Development, Indigenisation and Economic Empowerment.
It reads as follows:
TO ALL MINING BUSINESSES WHICH ARE NOT COMPLIANT WITH THE PROVISIONS
OF GENERAL NOTICE 114 OF 2011
published the General
Notice 114 of 2011 on the 25th of March 2011, which represents
the legal framework for the indigenisation of the mining sector.
2. The Notice
defined the minimum indigenisation and empowerment quota as 51%.
The Notice required that disposal of the required equity must be
to defined “designated entities”, which are as follows:
- The National
Indigenisation and Economic Empowerment Fund.
- The Zimbabwe
Mining Development Corporation
- A Statutory
Sovereign Wealth Fund/the National Indigenisation and Economic
share ownership scheme and Management share ownership schemes
or Community share ownership schemes or trust.
3. The notice
applied to all mining businesses in which 51% equity or controlling
is not held by indigenous Zimbabweans and whose net asset value
is at least $1, i.e., all non-indigenously owned mining businesses
had to comply with the provisions of this notice by 25th September
4. All mining
companies that have not complied with this notice should note that
51% of their shareholding is now deemed to be owned by the State
and any business transacted in respect of this 51% shall have been
transacted on behalf of the Government of Zimbabwe with effect from
the deadline stipulated in the said General Notice 114 of 2011,
which deadline for the avoidance of doubt was 25th September 2011.
5. Any profits
accruing to this 51% should be regarded as property of the State
and any losses incurred will be charged against the company's assets,
less the 51% indigenised portion, for any company that transacts
without Government involvement with effect from 25th September 2011.
are hereby advised that they are now dealing with assets of the
State in respect to the 51% indigenised portion and any attempt
to defraud the State will result in prosecution.
7. The Government
of Zimbabwe, through the Ministry of Youth Development, Indigenisation
and Economic Empowerment, enjoins all Zimbabwean citizens, top management,
middle management, technical support staff and the general workforce
of the companies involved that they are now expected to defend the
Zimbabwean 51% equity stake and also to uphold and execute the national
interest in respect of the administration, trade and any other business
transactions so as to ensure total indigenous economic empowerment.
YOUTH DEVELOPMENT, INDIGENISATION AND ECONOMIC EMPOWERMENT
Minister’s Rejection of the Minister’s Notice:
of the appearance of the Minister’s notice, the Prime Minister’s
Office released an official
statement rejecting the Minister’s publication of the
notice as surreptitious and unauthorised and categorically stating
that the notice does not state Government policy. For affected mining
businesses and members of the public the Prime Minister had this
should ignore Kasukuwere’s notice
of Youth Development, Indigenisation and Economic Empowerment today
issued a notice announcing that all mining firms that had not complied
with the indigenisation regulations by the September 2011 deadline
should assume that 51 per cent of their shares and proceeds of their
transactions now belongs to the Government with effect from that
The Prime Minister
would like to inform the public that there is no such Government
position. That issue has not been discussed and agreed upon by Government.
The Prime Minister wishes to inform the public in general and mining
firms in particular that the inclusive Government has not sanctioned
the Minister’s actions that are a threat to investment in
and Economic Empowerment Act does not empower the Minister to
unilaterally nationalise private entities and there is no reason
to create panic among investors by projecting the image of a voracious
government keen to grab compulsorily people’s companies without
compensation. It is not the policy of this Government to nationalise
the mining businesses or any other business.
The Prime Minister
of Zimbabwe has executive powers and the Constitution
of Zimbabwe bestows him with the authority to oversee and supervise
“policy formulation and implementation.” The Government
forum that deals with implementation of Government policy is the
Council of Ministers, which has not discussed or approved the purported
Government position captured in the public notice.
The Prime Minister
notes with concern that the Minister chose not to attend the Council
of Ministers on Tuesday, an executive forum of Government, only
to surreptitiously publish a notice with far reaching economic consequences
without consensus. The Prime Minister would like to inform mining
entities that, should anyone or any institution be it private or
public, attempt to enforce Minister Kasukuwere’s pronouncements,
they would be doing so unlawfully and without the mandate of the
The Prime Minister takes a serious view of the Minister’s
attempts to incite the public to act unlawfully against mining businesses.
The Minister’s statement poses a real risk of creating anarchy
in the industry and the PM will take corrective measures within
the proper fora and channels of Government.
interests of Zimbabwe demand a proper policy that creates jobs for
the millions of unemployed people in the country. They want massive
investment in the country and not a political campaign platform
that will only benefit the elite at the expense of the majority
of the people in the country.
Spokesperson Office of the Prime Minister
Basis for Minister’s Notice
The Prime Minister’s
use of the word “unlawfully” is absolutely correct.
The Minister’s pronouncements are ultra vires the law on indigenisation
and devoid of legal effect.
cannot take over mining businesses without proper legal authority
and there is no such legal authority – either in the Indigenisation
and Economic Empowerment Act or in any other Act of Parliament,
or in the Indigenisation Regulations or in General Notice 114 of
2011. General Notice 114, it will be remembered, was the subject
of an adverse report from the Parliamentary Legal Committee for
its inconsistency with the Constitution [see Bill
Watch 31/2011 of 6th August 2011]. The text of the report follows:
REPORT OF THE PARLIAMENTARY LEGAL COMMITTEE ON GENERAL NOTICE 114
In pursuit of
its constitutional mandate as provided for in section 40B of the
Constitution of Zimbabwe,
The Parliamentary Legal Committee met on the 15th of June 2011 at
1010hrs to consider General Notice 114 of 2011. After deliberations,
the Committee unanimously resolved that an adverse report be issued
in respect of the General Notice due to the following considerations:
of General Notice 114 of 2011 violate the Declaration of Rights
in the Constitution of Zimbabwe, namely sections 16 and 21. Section
21 of the Constitution provides as follows:
his own consent or by way of parental discipline, no person shall
be hindered in his freedom of assembly and association, that is
to say, his right to assemble freely and associate with other persons
and in particular to form or belong to political parties or trade
unions or other associations for the protection of his interests.
(2) The freedom
referred to in subsection (1) shall include the right not to be
compelled to belong to an association
In the Notice,
the Minister has directed that non-indigenous mining businesses
must sell their shares to designated entities in order to achieve
51% Indigenization. Section 3(1) of the General Notice states that:
mining business shall achieve the minimum Indigenisation and empowerment
quota by the disposal …of its shares or interests to designated
agents not latter …
- The National
Indigenization and Economic Empowerment fund;
- The Zimbabwe
Mining Development Corporation established in terms of the Zimbabwe
Mining Development Corporation Act (Chapter 21:08); or
- And company
or other entity incorporated by the Zimbabwe Mining Development
Corporation or the fund for the purposes of this notice; or
- A statutory
sovereign wealth fund that may be created by law; or
- An employee
share ownership scheme or trust, management share ownership scheme
or trust or community share ownership scheme or trust that complies
with section 14, 14A or 14B of the Regulations.
The net effect
of this directive is that in order to achieve the prescribed indigenisation
quota, a mining business must sell its shares to designated entities.
In other words, mining business entities cannot achieve the prescribed
quota by selling their shares to partners of their choice. The Minister
has already found partners for them without their consent. They
have been compelled to belong to certain organizations, that it
designated entities. This is clearly a flagrant violation of section
21 of the Constitution quoted above, which is the freedom of association
General Notice violates section 16 of the Constitution. Section
16 provides that no property of any description or interest or right
therein shall be compulsorily acquired. In the case of May &
Ors v Reserve Bank of Zimbabwe 1985 (2) ZLR 358 at page 358, the
Supreme Court defines shares in company as property. The effect
of this judgment is that shares in mining business are property
duly protected by section 16 of the constitution of Zimbabwe.
designated are, in the main, state corporations. The notice by the
Minister, therefore, provides for compulsory acquisition of property
by the state. In so doing the Minister has clearly violated section
16 of the Constitution, which provides for the protection from deprivation
The third point
that caused the Committee to pass an adverse report is that the
Notice is purported to have been passed in terms of section 5 (4)
as read with section 5A of the Indigenization and Economic Empowerment
Regulations. Section 5(4) only allows the Minister to prescribe
by notice 3 issues only:
1. With respect
to each sector, what lesser share than 51% shall be lesser share
that indigenous Zimbabweans may hold in business operating in the
2. The maximum
period that the sector may continue to operate in that way, and
3. The weighting
to be assigned to any socially and economically desirable objective.
In the Notice,
the Minister is obliged by law to dwell on these three issues only.
Instead, the Minister dealt with issues that he is not empowered
to deal with by the enabling statutory instrument.
The other glaring
contravention of the enabling statutory instrument by the Minister
is on the matter of asset value. Whereas the statutory instrument
provides that only business with a net asset value of US$500 000,
or more, must submit a provisional Indigenisation form, the General
Notice reduces this to a single United States Dollar. Again, this
is a matter that the Minister is not empowered by section 5 of the
regulation to deal with. Matters that the MINISTER is prescribed
to deal with by the regulation have been enumerated above. In this
respect, the General Notice has gone beyond matters that are allowed
by law to be dealt with through General Notices.
the foregoing, the learned opinion of the Parliamentary Legal Committee
is that General Notice 114 of 2011 should be repealed because it
is not good law. It is bad law because it violates sections 16 and
21 of the Constitution, it is bad law because it is ultra vires
the provision of the enabling statutory instrument, which is the
Indigenisation and Economic Empowerment Regulation 2010.
Hon S.L. Mushonga
Parliamentary Legal Committee
are available from email@example.com
and Economic Empowerment Act
Regulations updated to include all amendments [SI
- GN 114/2011
– Indigenisation of mining sector
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