Latest On Zimbabwe’s Barely Legal Indigenization Policy


Zimbabwe’s indigenization policy was put forward in 2008 and in simple speak, it is a law that insists that black Zimbabweans must acquire at least 51% ownership of all foreign companies having a value above $500,000.

It was one of the reasons why President Robert Mugabe was in the news in the first quarter of the year besides his more controversial moves like booting out foreign companies from the country’s diamond mining industry and throwing the party to end all parties in the midst of the country’s drought. The Zimbabwean government represented by Mugabe in a bid to enforce the indigenization policy, back in March, had issued threats to seize control of foreign companies who did not put forward plans on how they planned to “indigenize” their companies.

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At the time, the companies had been threatened with a cancellation of operational licenses in the country. The government claims that the earlier threat persuaded 50 companies to produce some kind of documentation for the government before Easter. The deadline however passed without much event, but a more recent threat which had a deadline for yesterday, promised to seize the assets owned by directors in foreign companies, should they again fail to provide the documentation.

Indigenisation Policy

Lawyers who pitched in on the indigenization policy after several analysis, believe that the government has no real leg to stand on. Derek Matyszak of the Research and Advocacy Unit who has analysed the law for years believes that none of the threats could be enforced. One reason looked into is that although the law says black Zimbabweans must acquire at least 51% ownership of all foreign companies with a value of more than $500 000, new
black shareholders must still buy their majority shareholding.

Derek Matyszak insists that whatever few indigenization deals were concluded in the past few years, details of how they worked out
and what money changed hands has never been made public. He went on to say; “Governmental pronouncements on indigenization rarely accord with the law…Too often the debate about ‘indigenization’ is carried out in ignorance of what the law actually says, whether the regulations actually conform to the enabling Act, and whether those tasked with implementing the Act actually have the power to do what they say they will do.”

One of Zimbabwe’s most senior businessmen, Mutch Masunda, who has headed of some of Zimbabwe’s largest companies and is a long-established lawyer, said: “Nobody I know is sure about this law and the deadline as it all lacks any clarity, it lacks certainty, consistency, predictability and sustainability.” He agreed with Matyszak along with other businessmen and some of Zimbabwe’s most senior lawyers who believe that the latest threats may be no more than an attempt to intimidate foreign companies into selling off shares in their businesses.

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