THE proposed Indigenisation and Economic Empowerment Bill will increase Zimbabwe’s risk profile and prolong the current economic crisis, the Zimbabwe National Chamber of Commerce (ZNCC) has said.
The Bill, currently before
parliament, will compel foreign companies to sell a 51% shareholding to local business people.Foreign companies that refuse to sell a 51% shareholding to locals will lose their operating licences.
Zimbabwe’s risk profile has increased over the past seven years because of government’s hostile economic policies. International companies have relocated to countries with investor-friendly laws.
In their submissions to parliament this week ZNCC warned that the Bill will have catastrophic effects on the ailing economy if allowed to pass into law in its present form.
The ZNCC said the Bill also gives too much power to the responsible minister.
“It is business’ view that the minister administering the proposed Act will have too much power, most of it in the form of unfettered discretion,” the ZNCC said.
“The powers are so wide that they require that checks and balances be incorporated into the Bill in order to ensure good corporate governance values and transparency in the administration of the proposed Act, and that the responsible Minister must be clearly defined.”
It said the National Indigenisation and Economic Empowerment Board which the Bill proposes to establish was too narrow in its representations.
“There is a need to improve the appointment process of the board. We recommend a situation where business, labour and other key stakeholders submit a list of nominees from which board appointments are then made and ratified by such a body as parliament.”
The ZNCC said it was worried that the proposed board will lose its independence if appointed solely by government.
“This avoids situations as has been observed in parastatals where each minister who comes aboard changes the boards by appointing his own people thereto. Corporate governance values need to be incorporated into the appointment process of the board,” said the ZNCC.
It said the powers of the proposed board are severely limited and therefore subject to “intrusive ministerial directions”.
“This would make the Board pander the whims of the minister.”
The ZNCC also questioned the timing of the Bill saying the process should have been done soon after Independence when the economy was still relatively stable.
It said the timing was wrong because of the current economic crisis and high inflation.
“In view of the current macro-economic environment, there is a real possibility that the Bill could influence systematic asset stripping by organisations so that by the time the Bill becomes law, beneficiaries will only inherit empty shells.”
“Given the experiences of the land reform programme, proprietors could be influenced to externalise their monies.” The Chamber of Mines of Zimbabwe and Bankers Association of Zimbabwe who also made submission said the Bill was no good for business.
Chamber of Mines president Jack Murehwa said the mining community was not pleased with the 51% threshold and instead preferred a 30% threshold staggered over 10 years. — Staff Writer.