Zimbabwe Talks Treasury Bills To Repay White Farmers, Moves Indigenization To Foreign Biz
The Zimbabwe government says it may seize assets of foreign owned businesses
that failed to give up majority control to black Zimbabweans by today’s deadline — part of the country’s indigenization laws designed to correct racial imbalances caused by colonization.
Most of Zimbabwe’s foreign-owned banks and mining companies have not submitted their indigenization plans, Reuters reported.
Zimbabwe is trying to repair relations with international lenders. The government insists it’s committed to normalizing relations with the rest of the world, “including our own farmers,” and has been exploring ways to do that, Finance Minister Patrick Chinamasa said Thursday at a meeting in Harare with officials from the International Monetary Fund, Bloomberg reported.
The government may issue treasury bills to pay 3,000-to-4,000 farmers who lost their land in earlier indigenization actions, Chinamasa said.
Companies that have done business in Zimbabwe for decades could be affected by indigenization, including Anglo American Platinum, Nestlé, Standard Chartered and British American Tobacco, Quartz reported.
Introduced in 2008, the Indigenization and Empowerment Act became effective in 2010. It requires foreign companies valued at more than $500,000 to transfer a controlling interest of 51 percent ownership to “indigenous Zimbabweans,” according to the ZimbabweStockExchange website.
The transfers were originally meant to be voluntary, but the ZANU PF-led government is eager to speed up the process.
The government tried to implement the law two years ago but it was mostly ignored. This time, it promises action, BBC reported.
The Zimbabwe government said it will go after the assets of company directors who fail to submit indigenization plans in order to protect employees who may lose their jobs in the process.
In 2000, Zimbabwe began transferring 4,500 white-owned farms to almost 170,000 black Zimbabwean families.
The land transfers were sometimes violent and resulted in about 300,000 lost farm jobs and at least 12 lives lost, Bloomberg reported. Tobacco production, once Zimbabwe’s No. 1 export, was decimated. There were famines in a country that was once Africa’s No. 2 corn exporter.
Land transfers have been blamed for Zimbabwe’s economic collapse, but a 2010 study by Sussex University found that indigenization had some pluses, BBC reported. It’s a myth that it was a complete failure.
This time around, there’s no room for negotiation , according to Indigenization Minister Patrick Zhuwao, nephew of President Robret Mugabe. Foreign companies that fail to comply with indigenization will have their licenses revoked. “I’m not here to discuss whether indigenization is good. It’s the law of the land, a fact,” he said, according to Quartz.
Mugabe ran for re-election in 2013 — his seventh term — on the basis that black people were discriminated against during the colonial era, BBC reported.
Critics say forcing foreign companies to give up control could discourage much-needed foreign direct investment.
The opposition MDC party said the government is playing Russian roulette with its citizens by repelling foreign investors instead of embracing them at a time when the country needs foreign direct investment desperately, Quartz reported.
China, Zimbabwe’s major investor in recent years, has more than 100 Chinese companies operating in Zimbabwe. The move raises red flags for foreign investors.
Zimbabwe is trying to repair relations with international lenders, Bloomberg reported. The government has already paid 240 white commercial farmers, according to Douglas Mombeshora, Minister of Lands and Rural Settlements. The compensation plan is part of Mugabe’s efforts to restore relations with the IMF.
The government is struggling to meet monthly wage bills that consume more than 80 percent of revenue, Chinamasa told delegates at the meeting.
“We have to start talking about Treasury Bills,” he said. “The budget is tight.”
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