HARARE (Reuters) - Zimbabwe’s finance minister on Thursday gave foreign-owned firms operating in the country, including mines and banks, a March 2016 deadline to submit plans on how to comply with a law requiring them to sell at least 51 percent shares to locals.
The Indigenisation and Economic Empowerment Act was passed in 2008 under President Robert Mugabe’s black empowerment drive, but implementation has been slow, with potential foreign investors warning the law would hinder much-needed investment in the southern African nation.
“All companies that have not yet submitted their indigenisation implementation plans as required by the Act should submit their applications by the new deadline of 31 March 2016,” Patrick Chinamasa said in a statement.
The previous deadline was January 2014.
Chinamasa said existing foreign-owned firms could continue operating for up to five years, including a possible extension, but would be forced to pay an “indigenisation compliance levy as a trade-off for non-compliance.”
The world’s two largest platinum producers Anglo American Platinum and Impala Platinum and banking groups Standard Chartered Plc and Barclays Plc are some of the foreign-owned firms with operations in Zimbabwe.
Amplats and Implats have previously submitted empowerment plans, which are still being considered by Mugabe’s government.
Chinamasa reiterated the government would not pay for majority shares in mines, saying the government’s contribution in the business was the underground resource owned by the state.
Foreign shareholders in a mine can, however, dilute the government’s stake by injecting new capital. But the state will have up to five years or more to buy new shares in the business to restore its 51 percent shareholding, Chinamasa said.
Foreign-owned companies in manufacturing, financial services and construction will have to directly sell between 20 and 30 percent shares to locals, while empowerment credits, such as funding youth and women programs, make up for the balance.
Chinamasa said no new foreign investors would be allowed in reserved sectors such as fuel retail, cigarette manufacturing, retail and wholesale trade and crop production unless under special circumstances determined and approved by Cabinet.
Reporting by MacDonald Dzirutwe; Editing by Ed Stoddard and Mark Potter