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 Americans, Tourists, Reflect on Meaning of Thanksgiving

VOA garnered opinions from several people soon after November 13 Paris attacks, which colored many of their thoughts

Video Thais Send Security Concerns Down the River

In northern Thailand, the annual tradition of constructing floating baskets to carry away the year’s bad spirits highlights the Loy Krathong festival

Video Tree Houses - A Branch of American Dream

Workshops aimed at teaching people how to build tree houses have become widely popular in America in recent years

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

By the Numbers

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Islamic State Unfazed by Losses in Iraq, Syriai
November 26, 2015 5:21 AM
Progress in the U.S.-led effort to beat Islamic State on its home turf in Iraq and Syria has led some to speculate the terror group may be growing desperate. But counterterror officials say that is not the case, and warn the recent spate of terror attacks is merely part of the group’s evolution. VOA National Security correspondent Jeff Seldin has more.

Video Islamic State Unfazed by Losses in Iraq, Syria

Progress in the U.S.-led effort to beat Islamic State on its home turf in Iraq and Syria has led some to speculate the terror group may be growing desperate. But counterterror officials say that is not the case, and warn the recent spate of terror attacks is merely part of the group’s evolution. VOA National Security correspondent Jeff Seldin has more.

Video Taiwan Looks for Role in South China Sea Dispute

The Taiwanese government is one of several that claims territory in the hotly contested South China Sea, but Taipei has long been sidelined in the dispute, overshadowed by China. Now, as the Philippines challenges Beijing’s claims in an international court at The Hague, Taipei is looking to publicly assert its claims. VOA’s Bill Ide has more from Beijing.

Video Syrian Refugees in US Express Concern for Those Left Behind

Syrian immigrants in the United States are concerned about the negative tide of public opinion and the politicians who want to block a U.S. plan to accept 10,000 Syrian refugees. Zlatica Hoke reports many Americans are fighting to dispel suspicions linking refugees to terrorists.

Video After Paris Attacks, France Steps Up Fight Against IS

The November 13 Paris attacks have drawn increased attention to Syria, where many of the suspected perpetrators are said to have received training. French President Francois Hollande is working to build a broad international coalition to defeat Islamic State in Syria and in Iraq. Zlatica Hoke reports.

Video US, Cambodian Navies Pair Up in Gulf of Thailand

The U.S. Navy has deployed one of its newest and most advanced ships to Cambodia to conduct joint training drills in the Gulf of Thailand. Riding hull-to-hull with Cambodian ships, the seamen of the USS Fort Worth are executing joint-training drills that will help build relations in Southeast Asia. David Boyle reports for VOA from Preah Sihanouk province.

Video Americans Sharpen Focus on Terrorism

Washington will be quieter than usual this week due to the Thanksgiving holiday, even as Americans across the nation register heightened concerns over possible terrorist threats. VOA’s Michael Bowman reports new polling data from ABC News and the Washington Post newspaper show an electorate increasingly focused on security issues after the deadly Islamic State attacks in Paris.

Video World Leaders Head to Paris for Climate Deal

Heads of state from nearly 80 countries are heading to Paris (November 30-December 11) to craft a global climate change agreement. The new accord will replace the Kyoto Protocol on Climate Change that expired in 2012.

Video Uncertain Future for Syrian Refugee Resettlement in Illinois

For the trickle of Syrian refugees finding new homes in the Midwest city of Chicago, the call to end resettlement in many U.S. states is adding another dimension to their long journey fleeing war. Organizations working to help them integrate say the backlash since the Paris attacks is both harming and helping their efforts to provide refugees sanctuary. VOA's Kane Farabaugh reports.

Video Creating Physical Virtual Reality With Tiny Drones

As many computer gamers know, virtual reality is a three-dimensional picture, projected inside special googles. It can fool your brain into thinking the computer world is the real world. But If you try to touch it, it’s not there. Now Canadian researchers say it may be possible to create a physical virtual reality using tiny drones. VOA’s George Putic reports.

Video New American Indian Village Takes Visitors Back in Time

There is precious little opportunity to experience what life was like in the United States before its colonization by European settlers. Now, an American Indian village built in a park outside Washington is taking visitors back in time to experience the way of life of America's indigenous people. Carol Pearson narrates this report from VOA's June Soh.

Video Even With Hometown Liberated, Yazidi Refugees Fear Return

While the northern Iraqi town of Sinjar has been liberated from Islamic State forces, it's not clear whether Yazidi residents who fled the militants will now return home. VOA’s Mahmut Bozarslan talked with Yazidis, a religious and ethnic minority, at a Turkish refugee camp in Diyarbakır. Robert Raffaele narrates his report.

Video Nairobi Tailors Make Pope Francis’ Vestments

To ensure the pope is properly attired during his visit, the Kenya Conference of Catholic Bishops asked the Dolly Craft Sewing Project in the Nairobi slum of Kangemi to make the pope's vestments, the garments he will wear during the various ceremonies. Jill Craig reports.

Video Cross-Border Terrorism Puts Europe’s Passport-Free Travel in Doubt

The fallout from the Islamic State terror attacks in Paris has put the future of Europe’s passport-free travel area, known as the "Schengen Zone," in doubt. Several of the perpetrators were known to intelligence agencies, but were not intercepted. Henry Ridgwell reports from London European ministers are to hold an emergency meeting Friday in Brussels to look at ways of improving security.

Video El Niño Brings Unexpected Fish From Mexico to California

Fish in an unexpected spectrum of sizes, shapes and colors are moving north, through El Niño's warm currents from Mexican waters to the Pacific Ocean off California’s coast. El Nino is the periodic warming of the eastern and central Pacific Ocean. As Faiza Elmasry tells us, this phenomenon thrills scientists and gives anglers the chance of a once-in-a-lifetime big catch. Faith Lapidus narrates.

Video Terrorism in Many Forms Continues to Plague Africa

While the world's attention is on Paris in the wake of Friday night's deadly attacks, terrorism from various sides remains a looming threat in many African countries. Nigerian cities have been targeted this week by attacks many believe were staged by the violent Islamist group Boko Haram. In addition, residents in many regions are forced to flee their homes as they are terrorized by armed militias. Zlatica Hoke reports.

Video Study: Underage Marriage Rate Higher for Females in Pakistan

While attitudes about the societal role of females in Pakistan are evolving, research by child advocacy group Plan International suggests that underage marriage of girls remains a particularly big issue in the country. VOA’s Ayesha Tanzeem reports how such marriages leads to further social problems.

VOA Blogs