Companies owned by foreigners face closure unless they sell or give up 51 percent of their shares to black Zimbabweans by April 1, announced Indigenization Minister Patrick Zhuwao.
Mugabe’s nephew, Patrick Zhuwao, who is the minister for youth, indigenization and economic empowerment, issued the directive last week. He warned failure to comply will result in licenses being revoked and there is no room for negotiation.
“I’m not here to discuss whether indigenization is good. It’s the law of the land, a fact, Comply by that date or close shop, comply by that date or face the full wrath of the law,” Bloomberg quotes Zhuwao, who is also President Robert Mugabe’s nephew.
Household names like Standard Chartered, British American Tobacco, Anglo American Platinum and Nestlé, all who have operating in the country for several decades, could be affected.
Should any company fail to comply with the directive, the Zimbabwe government has vowed to confiscate the assets of directors whose companies fail to submit indigenization plans in order to protect employees who may lose their jobs in the process.
The Indigenization and Empowerment Act, which was introduced in 2008, only came into effect in 2010. The policy requires foreign companies valued over than USD $500,000 to transfer % of their ownership to local entities or individuals. Originally, the transfers were supposed to be voluntary, but the ZANU PF-led government grew impatient at the slow pace of development and then resorted to state power to speed up the process.
While addressing party members in December 2015 at the ruling ZANU-PF Annual People’s Congress, Mugabe emphasized: ‘In 2016 we will not accept a company which refuses and rejects our policy of indigenization and empowerment in the manner we inscribed it.’
The IMF requested, last month, that the Mugabe administration clarify the country’s policy on black empowerment. Zimbabwe, on its part, has agreed to major reforms including compensation for evicted white farmers.
The government says it expects an IMF loan in the third quarter of this year, the first since 1999, after repaying foreign lenders $1.8 billion by the end of June.
Zimbabwe is well known for its rich mineral resources, the Southern African country has the world’s second-biggest deposit of chrome and platinum after South Africa.
