News / Africa

Zimbabwe Economy Hurt by Uncertainty About Indigenization Law

Industry Minister of the smaller Movement for Democratic Change Welshman Ncube (file photo)
Industry Minister of the smaller Movement for Democratic Change Welshman Ncube (file photo)
Peta Thornycroft

Protests this week in Zimbabwe's capital saw small Nigerian-owned shops looted by President Robert Mugabe’s loyalists, who say their demonstrations were in support of so-called indigenization laws. Politicians and economists say the uncertainty about the laws is harming Zimbabwe's slow economic recovery.

A year ago, new laws were published that said all companies valued at more than $500,000 must surrender a 51-percent share to black Zimbabweans.

This sent shock waves through the business community at a time when many were trying to revive the economy shattered by the former ZANU-PF government.

The laws have since been revised, but President Robert Mugabe and other ZANU-PF leaders regularly tell supporters they can help themselves to majority shareholdings in white and foreign-owned companies.

Industry Minister Welshman Ncube of the smaller Movement for Democratic Change, has been trying to manage the fallout from the indigenization law, which he says, has several shortcomings.

"There is a law providing for a framework for indigenization, that law leaves a lot to be desired in many areas, particularly in terms of clarity and fairness, [but] unless and until it is changed, it is the law," Ncube said.

He says the wording within the legislation allows for some flexibility and discretion within the indigenization law.

"Remember it is not a directory law, it is an aspirational law,” he added. “It says we shall aspire to have such and such percentage of ownership in companies in Zimbabwe. It does not say we shall have, it says 'we shall aspire,' which the government shall endeavour to achieve XYZ."

Earlier this month, a Mauritius company, Essar Africa, took over 55 percent of Zimbabwe’s only iron and steel company, ZISCO, which was previously state-owned and went bankrupt under the former ZANU-PF government.

Ncube said flexibility in the indigenization law allowed a foreign company a majority shareholding of ZISCO.

"For us, what is important is to bring ZISCO back into line and for it to contribute to the economy of the country, and not to quibble about six-percent difference in equity," said Ncube.

Ncube says the uncertainty of the indigenization laws has frightened off many foreign-owned companies from recapitalizing aging factories, such as the only vehicle tire manufacturer, Dunlop, based in Bulawayo.

"There are many, many companies whose foreign shareholders were about to put more money in them, say a company such as Dunlop,  and they immediately put on hold some of those plans," he said.

ZANU-PF Youth Minister Saviour Kasukuwere told party members last month they had a right to take over South African-owned sugar companies in southeastern Zimbabwe.

Ncube said Kasukuwere and others who encourage people to take over companies were inciting them to break the law.

"When Kasukuwere has said that, we have responded, instantly as part of the government, that it is not government  policy, that it does not have any foundation in law,  and therefore is unlawful," said Ncube.

Kasukuwere did not answer his mobile phone Tuesday when VOA sought a response.

Ncube says the uncertainty of the indigenization laws and threats to take over foreign companies are seriously affecting economic recovery.

While Zimbabwe previously manufactured much of what it consumed, most retail goods are now imported from South Africa.

Most foreign companies in Zimbabwe are South African-owned.

You May Like

Video One Year After Thai Coup, No End in Sight for Military Rule

Since carrying out the May 22, 2014 coup, the general has retired from the military but is still firmly in charge More

Goodbye, New York

This is what the fastest-growing big cities in America have in common More

Job-Seeking Bangladeshis Risk Lives to Find Work

The number of Bangladeshi migrants on smugglers’ boats bound for Southeast Asian countries has soared in the past two years More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Turkey's Main Opposition Party Hopes for Election Breakthroughi
X
May 22, 2015 10:23 AM
Turkey’s main opposition Republican People’s Party has sought an image change ahead of the June 7 general election. The move comes after suffering successive defeats at the hands of the Islamist-rooted AK Party, which has portrayed it as hostile to religion. Dorian Jones reports from the western city of Izmir.
Video

Video Turkey's Main Opposition Party Hopes for Election Breakthrough

Turkey’s main opposition Republican People’s Party has sought an image change ahead of the June 7 general election. The move comes after suffering successive defeats at the hands of the Islamist-rooted AK Party, which has portrayed it as hostile to religion. Dorian Jones reports from the western city of Izmir.
Video

Video Europe Follows US Lead in Tackling ‘Conflict Minerals’

Metals mined from conflict zones in places like the Democratic Republic of Congo are often sold by warlords to buy weapons. This week European lawmakers voted to force manufacturers to prove that their supply chains are not inadvertently fueling conflicts and human rights abuses. Henry Ridgwell reports from London.
Video

Video Class Tackles Questions of Race, Discrimination

Unrest in some U.S. cities is more than just a trending news item at Ladue Middle School in St. Louis, Missouri. As VOA’s Kane Farabaugh reports, it’s a focus of a multicultural studies class engaging students in wide-ranging discussions about racial tensions and police aggression.
Video

Video Mind-Controlled Prosthetics Are Getting Closer

Scientists and engineers are making substantial advances towards the ultimate goal in prosthetics – creation of limbs that can be controlled by the wearer’s mind. Thanks to sophisticated sensors capable of picking up the brain’s signals, an amputee in Iceland is literally bringing us one step closer to that goal. VOA’s George Putic reports.
Video

Video Afghan Economy Sinks As Foreign Troops Depart

As international troops prepare to leave Afghanistan, and many foreign aid groups follow, Afghans are grappling with how the exodus will affect the country's fragile economy. Ayesha Tanzeem reports from the Afghan capital, Kabul.
Video

Video Poverty, Ignorance Force Underage Girls Into Marriage

The recent marriage of a 17-year old Chechen girl to a local police chief who was 30 years older and already had a wife caused an outcry in Russia and beyond. The bride was reportedly forced to marry and her parents were intimidated into giving their consent. The union spotlighted yet again the plight of many underage girls in developing countries. Zlatica Hoke reports poverty, ignorance and fear are behind the practice, especially in Asia and Africa.
Video

Video South Korea Marks Gwangju Uprising Anniversary

South Korea this week marked the 35th anniversary of a protest that turned deadly. The Gwangju Uprising is credited with starting the country’s democratic revolution after it was violently quelled by South Korea’s former military rulers. But as Jason Strother reports, some observers worry that democracy has recently been eroded.
Video

Video California’s Water System Not Created To Handle Current Drought

The drought in California is moving into its fourth year. While the state's governor is mandating a reduction in urban water use, most of the water used in California is for agriculture. But both city dwellers and farmers are feeling the impact of the drought. Some experts say the state’s water system was not created to handle long periods of drought. Elizabeth Lee reports from Ventura County, an agricultural region just northwest of Los Angeles.
Video

Video How to Clone a Mammoth: The Science of De-Extinction

An international team of scientists has sequenced the complete genome of the woolly mammoth. Led by the Swedish Museum of Natural History in Stockholm, the work opens the door to recreate the huge herbivore, which last roamed the Earth 4,000 years ago. VOA’s Rosanne Skirble considers the science of de-extinction and its place on the planet
Video

Video Blind Boy Defines His Life with Music

Cole Moran was born blind. He also has cognitive delays and other birth defects. He has to learn everything by ear. Nevertheless, the 12-year-old has had an insatiable love for music since he was born. VOA’s June Soh introduces us to the young phenomenal harmonica player.

VOA Blogs