UNCERTAINTY surrounds shares warehoused by the National Indigenisation and Economic Empowerment Board (Nieeb) after the wholesale changes to indigenisation law announced by government last month, Zimbabwe Independent has learnt.
By Kudzai Kuwaza
In his 2018 national budget last month, Finance minister Patrick Chinamasa announced that the indigenisation law which compels foreign-owned businesses to sell controlling equity stakes to indigenous Zimbabweans would now only apply to just the diamond and platinum sectors
The announcement has generated questions on the fate of shares warehoused by Niebb under the National Indigenisation and Empowerment Fund (Nief). South African cement-producing company PPC, Blanket Mine owned by Canadian company Caledonia and RHA Tungsten owned by Premier African Minerals ceded shares to Nief, a fund administered by Nieeb as part of its compliance with the indigenisation law.
The announcement of changes to indigenisation law could have an adverse effect on Niebb and the fund which has been severely underfunded since its inception. The amended rules could pose a serious threat to its operations as the indigenisation law, which was pivotal to its existence has been significantly watered down.
However, Nieeb CE Rangu Nyamurundira told the Independent on Wednesday that the board will stand guided by the law when it is gazetted.
“We wait for the law itself. We are going to be advised by that new law,” Nyamurundira said. “We cannot preempt anything other than what the law provides for. We wait for that. What I can guarantee is that these shares are owned by Nieeb.”
Nieeb was established through an Act of Parliament, the Indigenisation and Economic Empowerment Act [Chapter 14.33] 17th of April 2008 and was tasked with spearheading the process of transforming the peripheral role of the indigenous majority in the economy to a leading role in the mainstream economy together with the attendant benefits of improving their standards of living.
The indigenisation law has been one of the main concerns for investors since its inception. The uncertainty around the law has been largely responsible for the lack of investment in the country as evidenced by the continued dwindling of foreign direct investment.
According to the United Nations Conference on Trade and Development, FDI in Zimbabwe has plummeted from US$545 million in 2014 to US$421 million in 2015 before further plunging to US$319 million.
At the time of its latest amendment, the clarification on indigenisation law by the then president Robert Mugabe in April 2016 was yet to be factored into the indigenisation law.