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Indigenisation Act remains unchanged

FIVE months after the Indigenisation and Economic Empowerment Act was amended — primarily to give line ministers power to approve indigenisation plans for sectors under their purview — the attendant regulations which have been in place since 2010 are still in force as none of the ministries are yet to gazette new or revised indigenisation targets and measures specific to their sectors of the economy.


The indigenisation Act was amended through Finance (No 3) Act 11/2014, ostensibly to allow flexibility and clarity in the implementation of the contentious programme, with the Indigenisation ministry only issuing compliance certificates on the recommendations of line ministries.

This followed pressure from the business fraternity, including investors, who argued that government policy that foreign businesses should surrender 51% of their businesses to indigenous persons was driving investment away.

The government transferred from the Minister of Youth, Indigenisation and Economic Empowerment to line ministers the function of prescribing the indigenisation targets and measures applicable to individual sectors of the economy — including the power to gazette notices in terms of section 3(4) of the Act — and assessing implementation plans submitted by businesses.

“In order to ensure that government’s policies and objectives of indigenisation and economic empowerment are implemented, businesses shall submit indigenisation and implementation plans for approval by the line minister and the line minister shall carry out an indigenisation and empowerment assessment rating of every business,” the amended act states.

It further says that should the plan meet the ministers’ approval, he/she shall, at the written request of the business, issue a certificate of compliance to the business no later than 14 days after such a request is received by the line minister.

A lawyers’ grouping, Veritas, however, observed that because there is a note on the provisions of Finance (No 3) Act [Act 11/2014, which provides that Statutory Instrument 21/2010 remains in force subject to such changes as may be required to bring it into compliance with the amendments to the Act, including, where appropriate, the substitution of “line minister” for the “minister”, the indigenisation regulations remained the same.

“Despite January’s amendments to the Act having been in force for over four months, not one line minister has gazetted new or revised indigenisation targets/measures specific to his or her sector of the economy. So the General Notices previously gazetted by the Minister of Youth, Indigenisation and Economic Empowerment are still in force, unchanged,” said Veritas.

The amending of the regulations contributed to Zimbabwe being deemed to have made progress in implementing its macroeconomic and structural reform programmess by the International Monetary Fund.

In its first review of the Staff Monitored Programme the IMF said “the recent amendments to the indigenisation law go toward creating an environment that can attract foreign investment, although investors are not convinced.

“Nevertheless, the authorities should make all possible efforts to inform potential investors of these changes, and reassure them that property rights will be fully respected. In this sense, the authorities’ decision to summarise the laws’ content through a guide for investors to comply with the new requirements goes in the right direction by reducing the scope for discretion and uncertainty which many investors have indicated as their main concern,” the IMF said.

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