HomeBusiness DigestAnxiety Grips Business

Anxiety Grips Business

ANXIETY continues to grip the business sector after President Robert Mugabe’s controversial re-election and his imminent drive towards the implementation of the Indigenisation and Economic Empowerment Act.


About 12 companies listed on the Zimbabwe Stock Exchange and an estimated 80 foreign-owned companies could be affected if the Act is implemented.

Last week Indigenisation and Empowerment minister Paul Mangwana said his ministry “was still vetting short-listed candidates” that would run a government board tasked with implementing the law that was passed in April this year.

Mangwana said his ministry was at an “advanced stage,” in implementing the Act, adding that the law would only affect selected companies. President Mugabe, according to Mangwana, was still assessing the would-be board members.

The legislation seeks, among other things, to force foreign-owned companies to cede a 51% share to “indigenous” investors.

Analysts who spoke to this paper questioned the modus operandi of the “empowerment” exercise with some saying that the law was awash with “grey” clauses that would make it difficult to put into practice.

“Nobody knows exactly whether the new government will implement the political promises that were made during the elections,” said businessman Luxon Zembe.

“This (anxiety) is heightening business and country investment risk which in turn could leave business on the edge.”

“This law has a lot of grey areas,” said one analyst. “It does not candidly explain the term ‘foreign-owned company’ and it is also driven by perception. South African companies owned by whites are likely to be affected whilst black-owned foreign companies might be spared.”

Gold miner Mettalon which is owned by SA businessman Mzi Khumalo is an example of a company that might be spared.

Targeting the capital-intensive mining sector, analysts warned, could paralyse the sector already reeling from acute foreign currency and power outages.

However, the Confederation of Zimbabwe Industries (CZI) said foreign-owned companies had the discretion to voluntarily off-load their controlling stake to local investors.

“Our understanding as CZI is that the law will be applied without segregation,” said CZI president Calisto Jokonya.

“The clarification we got from the ministry is that foreign-owned or non-indigenous companies can take the initiative to indigenise their companies by inviting indigenous investors of their choice.”

This week businessdigest looked at some of the listed companies that are likely to be affected by Mugabe’s empowerment policy thrust — which became the pinnacle of his campaign trail in the just ended polls.

British American Tobacco (BAT) has 56,95% shares owned by BAT International Holdings. This stake represents close to 10 million shares allotted to the United Kingdom-based investors. Insurance giant, Old Mutual, which is also likely to be affected by the legislation is the second largest shareholder, owning 17,41% through its life assurance arm.

Barclays Bank — Afcarme Zimbabwe Holdings — a locally incorporated company owns about 68% stake in the listed concern. Recently, British Liberal Democratic MP Norman Lamb claimed that Afcarme was a conduit of the England based bank.

Cafca — British company London Register owns 74,21% of the copper electric cable manufacturing company. The company like many others is reeling from acute foreign currency shortages and rising prices of metals on the world market. Cafca operations were also seriously affected by the closure of Mhangura Copper Mines owned by government’s mining investment arm, Zimbabwe Mining Development Corporation.

According to independent analyst Ariston, Radar, Delta, Pioneer and Murray & Roberts are some of the “foreign owned” companies that are likely to stir immense controversy if government pushes for the change in shareholding of these manufacturing companies.

Celsys, the industrial technology firm is controlled by multinational conglomerate, Lonhro that has had a harmonious relationship with government since Independence.

Hippo — Anglo-American Corporation have at least 50% controlling stake in the agro-processing concern that was affected by the controversial land reform programme in 2000.

Old Mutual Zimbabwe Ltd is an international company wholly owned by Old Mutual plc. Local shareholders own around 93 million shares in the insurance giant representing about 1,7% of the total issued shares in Old Mutual plc. The company in its prospectus boasts of spearheading the empowerment exercise.

“Old Mutual is often viewed as a very influential investor both on the stock market and in the real estate sector,” read the prospectus.

“Its investment activity is often labelled “foreign…we believe that the demutualisation of the old society is probably the biggest empowerment exercise in this country. Main beneficiaries were ordinary people — workers and policyholders.”

By Bernard Mpofu

Recent Posts

Stories you will enjoy

Recommended reading