Prime Minister Morgan Tsvangirai has dismissed the Indigenisation and Economic Empowerment Regulations as being of no force as they were gazetted without consultation within government.
Under the terms of the act, all companies are required to submit an indigenisation plan by April 15, 2010 explaining how their Zimbabwean operations will achieve the required minimum level of 51% ownership by indigenous Zimbabweans within five years across all business sectors.
The Prime Minister, who is responsible for the formulation of all government policy by Cabinet and the implementation of said policy, has said that neither he nor Cabinet reviewed the regulations before they were gazetted.
“They were published without due process as detailed in the Global Political Agreement (GPA) and the Constitution and they are therefore null and void,” the Prime Minister said.
The Regulations were published by the Ministry of Youth Development, Indigenisation and Empowerment in terms of section 21 of the Indigenisation and Empowerment Act and were due to come into force on 1 March 2010.
The regulations would have scared off foreign investors, already jittery about Zimbabwe as an investment destination as well as disenfranchising citizens due to the vague nature of their definition as to who qualifies as indigenous. In addition, the regulations would also discriminate against many black-owned companies from neighbouring African countries.
Without foreign direct investment in Zimbabwe, it will be difficult to kick-start the national economy, hampering Government’s ability to meet its commitments to improving the welfare of civil servants and essential services like health and education as well as hampering job creation.
The regulations also provide for the gazetting within twelve months of further rules relating to each sector and subsector of the economy as to what lesser share than the minimum indigenisation and empowerment quota may apply to businesses operating in the sector or subsectors in question.
The regulations also provide that a level of indigenisation lower than 51% may be assigned to a foreign-owned company where there are “socially and economically desirable objectives” in favour of such lower level.
According to the local press, Zimbabwe’s Chamber of Mines has made an eleventh hour proposal for the reduction of the government-fixed company shareholding threshold for indigenous Zimbabweans from 51 percent to 10 percent.
According to the local press, Chamber of Mines president Victor Gapare claimed on Thursday that the government had in principle agreed to its proposals.
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