Zimbabwe Minister Signals Step Back Over Black Ownership Law

Zimbabwe has no plan to force all foreign-owned companies to sell or cede 51 percent of their shares to black Zimbabweans, and will work on a new model to ensure locals have a stake in the economy.

“We’re not taking 51 percent of anyone’s money,” Finance Minister Patrick Chinamasa told reporters in the capital, Harare, yesterday. “There’s no one-size-fits-all.”

Zimbabwe will decide how much of foreign companies local blacks should own “sector by sector,” he said, and the government is “quite comfortable” with the injection of foreign capital in the banking industry because it “will increase the volume of credit to the productive sector.” Zimbabwe’s indigenization minister, Francis Nhema, will put proposals to the country’s cabinet “soon,” Chinamasa said.

The southern African nation is probably softening its approach to indigenization to deal with a liquidity crisis partly caused by a 30 percent slump in February consumer spending, Thea Fourie, an analyst with IHS Global Insight in Johannesburg, said in a phone interview today.

“Things aren’t going well in Zimbabwe and the liquidity crisis has brought into focus what to do on the government’s part,” she said. “The softening of indigenization regulations is caused by a need to lure investors back to the country.”

Shift Ownership

Zimbabwe’s parliament passed the 51 percent ownership law in 2008 and began enforcing it three years later, compelling foreign and white-owned companies with assets of more than $500,000 to shift majority ownership to black Zimbabweans. Mining companies were in the front line, and Impala Platinum Holdings Ltd., Anglo Platinum Ltd. and Aquarius Platinum Ltd. have already complied with the law.

The easing of the indigenization requirements comes as Zimbabwe’s economy shows signs of deflation caused by a fall in consumer spending since elections last year.

Chinamasa said time-frames for allocating shares to Zimbabweans will be decided separately for each industry. Banks operating in the country that could potentially be affected include Barclays Plc, Standard Chartered Plc and South Africa’s Standard Bank Group Ltd.

“What we have said is that we want to encourage local participation,” Chinamasa said. “They will do it on the basis of a given framework, and also they pick up their partner and also they decide the price.”