Misunderstanding of Zimbabwe’s indigenisation policy has seen foreign investors shy away from the country’s mining industry, according to the country’s embassy in South Africa.
In 2008, President Robert Mugabe, signed the Indigenisation and Economic Policy into law, in terms of which 51% of all foreign- and white-owned businessses must be ceded to indigenous Zimbabweans.
In March this year, African law firm Webber Wentzel partner Bruce Dickinson told Mining Weekly that mining companies regard the policy as taking away their control over mining operations, while they are the drivers of economic growth and the providers of operating and expansion capital. This has been a constant point of contention between mining company owners and govern-ment and, as a result, it has directed the interest of foreign investors elsewhere.
He cited that the situation is uneconomical and does not lend itself to investors investing on a large scale, particularly with the continued uncertainty surrounding the policy.
However, speaking at KPMG’s Zimbabwe Country Focus Seminar last month, Zimbabwe consulate official Angelica Katuruza highlighted that foreign investors were not aware of the benefits of the indigenisation policy, which can yield positive results for companies.
“While the policy has been ill-received by industry, what has not been highlighted are the exceptions which are tabled within the policy. It is not in all cases that the 51% local ownership has to prevail as there are social and economic objectives that are set in place to make the policy fair,” she said.
Katuruza pointed out that the exceptions in the policy state that if a foreign-owned company established in Zimbabwe beneficiates raw materials prior to export, the company is entitled to full ownership of the business. If a foreign company explores those resources by establishing new technologies, that also earns them the right to have full ownership of the business. Also, if a foreign company offers and imparts new skills that benefit the Zimbabwean economy, it can have full ownership of the business.
In addition to these exceptions, she explained that should companies have other desired social and economic objectives, the Minister in charge of the policy would consider the suggestions in making a decision.
“We feel that these exceptions promote good business in the country and we hope that companies see Zimbabwe as a desired investment destination given the opportunities and mineral wealth that awaits exploration in the country,” she added.
Katuruza also indicated that the policy was currently under review and after the amendments have been made, industry will be made aware of the changes. She believes that these will prompt better confidence from foreign companies to invest in Zimbabwe.