Wall St. and Business Wednesdays: Zimbabwe Gov't Details Biz Takeover Plan by Angus Shaw
The government published proposed legislation Monday providing for Zimbabweans to take control of a 51 percent stake in the nation's businesses and companies, but stopping short _ at least for now _ of a sweeping takeover of foreign-owned companies.
Announcements in recent weeks by President Robert Mugabe and ministers that the government was poised to seize control of private businesses sent shock waves through an economy already reeling from the seizures of thousands of white-owned commercial farms since 2000 in the former regional breadbasket and repeated threats to nationalize foreign mining interests.
Central bank governor Gideon Gono last month cited uncertainty over property ownership rights as the biggest single cause of an eight-fold drop in investment since 2000.
Independent assessors said that, at face value, the Indigenization and Economic Empowerment Bill was not as severe toward foreign, white-owned and multinational companies as some commentators had predicted.
"The bill does not contain anything directly obliging existing businesses to set about indigenization forthwith," the Veritas assessors said.
The draft legislation required government approval of mergers, business acquisitions, changes in controlling interests and new investments.
In those cases, approval would be denied if such activities did not result in 51 percent Zimbabwean control.
However, there is nothing to prevent Mugabe from using special instruments to push through more draconian measures how to achieve Zimbabwean control or on foreign ownership.
The bill defined indigenous Zimbabwean as "any person who before April 18, 1980, (the nation's independence from colonial era white rule) was disadvantaged by unfair discrimination on the grounds of his or her race."
Lawyers said minorities of mixed race and Asian origin were included for the first time, and the clause could possibly be claimed by whites who opposed or campaigned against colonial rule.
Since independence the term indigenous, widely used in an affirmative action campaign, has applied almost exclusively to blacks and left out whites and other minorities born in the southern African nation _ some the descendants of several generations of settlers.
Whites and minorities account for an estimated 100,000 in the 12 million population, and most businesses are already black-owned and run.
The bill, scheduled for debate in the Harare legislature after it reconvenes next month, outlines a program for Zimbabweans to take control of a 51 percent stake in the nation's businesses and companies, without specifying precisely how this will be achieved.
Economic meltdown has led to acute shortages of hard currency, food, gasoline and most basic goods. Official inflation at around 4,500 percent is the highest in the world and compares to single figure inflation in most neighboring countries.
© 2007 The Associated Press
Wednesday, June 27, 2007