Foreign Banks Bow Down To Indigenisation Pressure

Foreign banks operating in Zimbabwe have submitted credible plans on how they intend to transfer majority shares to locals, the country’s finance minister said on Saturday, reducing the chances government could cancel their licences.

Under an Indigenisation and Economic Empowerment Act all foreign companies operating in Zimbabwe were given a March 31 deadline to sell at least 51% of their holdings or have their licences cancelled, part of President Robert Mugabe’s black empowerment drive.

Finance Minister Patrick Chinamasa said empowerment plans from Barclays Plc, Standard Chartered Plc, Old Mutual Plc and its two banking subsidiaries as well as South Africa’s Standard Bank and African banking group Ecobank were consistent with the law.

“I am pleased to advise that all the affected foreign-owned financial institutions operating in Zimbabwe have submitted credible indigenisation plans before the deadline of the 31stMarch 2016,” Chinamasa said in a statement.

Chinamasa is leading efforts to end Zimbabwe’s isolation from the West and trying to woo the International Monetary Fund, which has previously said the government should ease up its economic empowerment law to attract investment.

His comments come two days after another cabinet minister said most foreign banks and mining companies in Zimbabwe had not complied with Thursday’s deadline to transfer majority shares to locals.

Under the empowerment rules, foreign-owned financial services companies will have to sell at least 20% of shares directly to locals, while empowerment credits, such as funding for agriculture and youth and women programmes, make up the balance.

Mugabe’s black economic empowerment drive has unsettled foreign investors, some of whom fear that Harare could grab their assets in the same way that the government has seized more than 6,000 farms from white commercial farmers since 2000.