HARARE (Reuters) - President Robert Mugabe’s ZANU-PF party said on Tuesday it would increase black ownership of the economy in the next five years after its landslide election victory, adding to investors’ concerns about the party’s political dominance.
But the central bank sought to assuage worries of an imminent re-introduction of the local dollar, abandoned in 2009 after being rendered virtually worthless by hyperinflation.
The stock exchange’s main Industrial Index shed 1.7 percent, extending Monday’s 11 percent slide, as investors on the $5 billion Harare bourse digested the extent of the ZANU-PF win, which puts it in position to enact laws and change the constitution at will.
The local unit of Barclays Plc, Barclays Bank Zimbabwe, plunged 20 percent and top hotelier Meikles Limited was down 18.75 percent.
Before the July 31 election, the index hit a series of highs on hopes Prime Minister Morgan Tsvangirai might unseat the 89-year-old Mugabe at his third attempt.
On Tuesday, ZANU-PF ran full-page advertisements in newspapers saying its crushing election win was an endorsement of “black economic empowerment” plans that target foreign-owned companies including banks and mines.
“The people of Zimbabwe have given President Robert Mugabe and ZANU-PF a clear mandate to transform the economy through indeginisation and economic empowerment,” the party said.
“Over the next five years, Zimbabwe is going to witness a unique wealth transfer model that will see ordinary people take charge of the economy.”
ZANU-PF has set its eyes on 1,100 foreign-owned firms.
It also pledged to leverage mineral reserves ranging from gold to diamonds to platinum to raise money to prop up an economy still emerging from a decade-long recession.
Many Zimbabweans also fear reintroduction of the Zimbabwe dollar, a possibility alluded to by Mugabe and senior ZANU-PF official Patrick Chinamasa, who called the 2009 move to the U.S. currency a “strategic retreat.”
However, Reserve Bank governor Gideon Gono said the local currency would not be introduced anytime soon, adding that when it is adopted, the local unit would circulate alongside the greenback and South African rand.
“There are no plans whatsoever, within and outside the bank, for the immediate or near-term re-introduction of the Zimbabwe dollar into our system,” Gono said in a statement.
Gono presided over the industrial printing of the Zimbabwe dollar currency to cope with hyper-inflation of 500 billion percent. His last five-year term as governor ends in December.
Tsvangirai’s Movement for Democratic Change (MDC) party is challenging Mugabe’s victory in court. The legal challenge should be made by Friday and the constitution says the courts must rule on the case within 14 days.
Mugabe be sworn in only after the courts give the all-clear.
With state revenues dwindling due to a pre-election growth slow-down, economists say the new administration will face immediate spending pressures, particularly from poor farmers demanding seed and fertiliser for the September planting season.
Reporting by MacDonald Dzirutwe; Editing by Stella Mapenzauswa, Ron Askew