Zimbabwe’s controversial indigenisation policy remains an impediment to economic recovery with top government officials increasingly pushing for clarification of the law.
Finance minister Patrick Chinamasa last week told parliamentarians at a pre-budget meeting in Victoria Falls the country needs to clarify the indigenisation policy in order to boost foreign direct investment.
He said it is “critical” for the country to have clarity on the policy as the current situation retards investment inflow and weighs down the economy.
“In this regard (of indigenisation clarification) I am not where I wanted to be when I presented the 2014 budget,” Chinamasa said.
“But a lot of work has been happening, a lot of debate within government to get us to a point, whether you are an MP, whether you are a minister, you should all speak with one voice over this issue. It is a very critical issue.”
The indigenisation policy — viewed as racketeering by legislation — has been shrouded under a cloud of uncertainty since its promulgation in 2007 with investors shunning the country partly because of the law which they view as subtle expropriation and even extortion. It has been worsened by numerous pronouncements by various government officials who have sounded hostile to foreign capital.
Indigenisation minister Francis Nhema said “there are too many cooks” in as far as pronouncement on the indigenisation law is concerned.
Nhema earlier this year clashed publicly with Information minister Jonathan Moyo over the issue.
Chinamasa said revenue collection, which is below target, demonstrates that there is very little economic activity in the country.
The Finance minister said he told the International Monetary Fund delegation that visited the country recently that they were in the process of amending the Mines and Minerals Act and the Banking Act to instill confidence in the economy.
He revealed that the government will swoop on holders of mining claims who have not used them over a prolonged period using the “use-or-lose-it” principle. Chinamasa said the principle has been approved by cabinet.
He said some have held on their claims for “100 years” without carrying out any exploration activities, which is detrimental to the economy.
He revealed that the US$100 million facility for the gold mining sector was taking longer than he expected, but will provide a guarantee for the importation of equipment critical to the operations of small-scale miners.
Addressing the same meeting, Reserve Bank governor John Mangudya said the financial sector — also destabilised by threats of indigenisation — has been supporting agriculture and as at September 30, 2014, US$636 million had been advanced to the agriculture sector.
He said the conclusion of the on-going discussions regarding the features and acceptability of the 99-year land leases will pave way for increased lending to agriculture.
Mangudya said the sector has complemented the government’s efforts under ZimAsset by funding mortgages to the tune of US$357,62 million as at September 30, 2014.
Four banking institutions, he revealed, namely, CABS, FBC Building Society, BancABC and CBZ Bank have sourced off-shore funds from Shelter Afrique amounting to US$35,8 million.
Other institutions such as the Reserve Bank’s subsidiary, Homelink, is working on floating bonds amounting to US$20 million to support housing development.
Mangudya said as at September 30, loans disbursed under the Youth Fund amounted to US$7,52 million. Although youths got this money as part of the government’s empowerment initiative, most of them used it to buy cars, houses and other consumptive items, leading to their failure to repay loans.