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(Apr 02, 2008) President Robert Mugabe of Zimbabwe signed into law the Indigenization and Empowerment Act on March 7, 2008. The Act requires foreign-owned companies to offer at least 51 percent of their shares to indigenous Zimbabweans, according to news reports. It is unclear whether the mining industry is covered by the Act, Joseph Malaba, the country's head of the Chamber of Mines, has stated. Although Parliament passed amendments to the Mines and Minerals Act, allowing the government "to take over a 25 percent stake in foreign-owned mining companies for free in part fulfillment of the 51 percent indigenisation quota," the revised law lapsed on February 16 because Mugabe failed to sign it. (Brian Latham, Zimbabwe's Mining Industry Seek State Clarification on New Law, BLOOMBERG.COM, Mar. 10, 2008, available at http://www.bloomberg.com/apps/news?pid=newsarchive&sid=af38pzYHjnm4; Dumisani Ndlela, Zimbabwe: Stakeholders Cautious on New Law, FINANCIAL GAZETTE (Harare), Mar. 13, 2008, available at http://allafrica.com/stories/200803130628.html.)
The Indigenization and Empowerment Act also provides for the creation of an empowerment fund to finance the acquisition of working capital, shares, and other forms of finance for indigenous people, with the National Investment Trust (NIT) to be constituted as a special account for the fund. The NIT previously failed to raise capital for the purchase of a 15-percent share reserved for indigenous Zimbabweans in the platinum-producing company Zimplats, however. (Dumisani Ndlela, supra.)
Market analysts have been quoted as saying that the Act will "effectively seal Zimbabwe's fate as a pariah to international capital" (Id.). Marian Tupy, a Cato Institute policy analyst, condemned the Act even more strongly, as "yet another step on Zimbabwe's road to economic suicide" that will "expropriate non-black owners, while providing the ZANU-PF [ruling party] elite with a new source of income. The biggest victims of the Orwellian measure … will be the black majority." (Cato Scholar Comments on Zimbabwe's Indigenization and Economic Empowerment, Cato Institute Web site, Mar. 10, 2008, available at Act http://www.cato.org/pressroom.php?display=comments&id=859.)
- Author: Wendy Zeldin More by this author
- Topic: Investments More on this topic
- Jurisdiction: Zimbabwe More about this jurisdiction
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Last updated: 04/02/2008