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Zimbabwe Firms Miss Deadline to Hand Over Holdings to Black Nationals

FILE - Zimbabwe's Indigenization and Economic Empowerment Minister, Patrick Zhuwao
FILE - Zimbabwe's Indigenization and Economic Empowerment Minister, Patrick Zhuwao

Thursday marked the deadline set by Zimbabwe's government for all firms in the country to transfer the majority of their shares to black Zimbabweans.

State media reported Friday that companies have begun submitting plans on how they will adhere to the law, but failed to name any foreign companies that are complying.

"For the first time, we now have all the financial institutions in Zimbabwe actively submitting their plans on how they will comply,” Zimbabwe's Indigenization and Economic Empowerment Minister Patrick Zhuwao told The Herald, the country's state-run newspaper.

"For the first time, we do not have any financial institution which is sitting back and saying, β€˜let us wait and see.’"

The law, which took effect in 2008, requires foreign companies with more than $500,000 in assets to hand over 51 percent of their shares to black nationals.

Enforcement stressed

Standard Chartered PLC and Barclays PLC are among several banks with operations in Zimbabwe. There are also a few large mining companies, like Anglo American Platinum and Impala Platinum, with operations in the country.

Zimbabwe's government had attempted to force compliance with the indigenization plan in 2014, but few companies responded. This time, Zhuwao has promised to enforce the law and said the government would revoke licenses to operate if companies fail to comply.

"The position at law is not negotiable and laws are not negotiated," Zhuwao said at a Thursday briefing. "The position at law is that companies that are non-compliant have been breaking the law."

Critics weigh in

Opposition leaders were quick to condemn new calls for enforcement, saying that it would dissuade foreign investment and weaken the country's already woeful economy.

"In the present circumstances where the whole economy is in dire straits and the majority of companies are fighting for survival, any new indigenization activity or threats are simply counterproductive," the Movement for Democratic Change, the main opposition party, said in a statement. "It's time the government faced reality and abandoned this futile exercise, which is doing nothing to take the country forward."

The Zimbabwe Congress of Trade Unions also joined calls to abandon the indigenization plan, arguing that it would have a negative impact on workers.

Zhuwao, though, brushed off the criticisms in a recent interview with Voice of America, and said Zimbabwe needs to enforce the indigenization law to show investors it is serious when it implements new regulations.

"My view is that there is need to put finality to this issue," Zhuwao said. "So that people know that when the government of Zimbabwe puts in place a law, it will abide by that law. Now if we do not abide by the indigenization law, then how can any other investor believe that we are serious about abiding by any other law?"

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