The empowerment law states that locals should have 51% in all companies operating in the country and had unnerved investors needed to help rebuild the economy devastated by a decade of hyperinflation.
In his mid-term Fiscal policy presentation, Finance minister, Tendai Biti, said government had agreed to exempt new investors from complying with the clause that states that at least 51% should be given to locals to align the empowerment of the people to the country’s efforts to attract new investors.
“In respect of new FDI, FDI will not have to comply with Section 3 of the Indigenisation and Empowerment Act, that is, the 51% rule. However the Indigenisation and Empowerment Act and the Investment Act should be amended to require from foreign investor their own their localisation plans, be it, listings or share employee trusts,” Biti said.
Biti said the latest measure was arrived after government agreed that the country needs investors to expand the economy which has been underperforming. He said he was revising growth projections to 5,6% from the initial forecast of 9,4%. He said revenue collection would end the year at US$3,4 billion down from the original US$4 billion due to the underperformance of diamonds and the drought experienced this year among others.
He said the first half of 2012 has been a sad balance sheet of unmarked targets resulting in a long winter of despair characterised by low business confidence and generally a business as usual approach.
He proposed austerity measures underpinned by a cash budget system. He said the wage costs consuming over 70% of the expenditure costs are an elephant in the living room so are foreign travel costs which at US$19 million continue outstripping other expenditures.
Biti said ministries that are collecting revenue should remit it to treasury accusing the ministry of Home Affairs singling out the Registrar General’s Office and Police as notorious.
Biti said in the second half of the year, there will be a freeze on recruitment and any dispensation will be subjected to concurrence of Treasury and the Public Service Commission.
Meanwhile Prime Minister Morgan Tsvangirai who is currently touring Japan said investors to Zimbabwe were expressing discomfort with the country’s indigenisation laws.
In a statement,released by the Prime Minister’s spokesperson, Luke Tamborinyoka, stated that throughout the meetings, the Japanese Minister and the business
executives of leading corporate had expressed concern over the controversial indigenisation programme, which they said affected both existing and new investment from Japan.
“The indigenisation law is an obstacle to investment by Japanese companies. We hope that you will review this law as it is affecting both prospective and existing Japanese businesses,” the statement quoted Economy, trade and investment minister, Yukio Edano.
Tsvangirai was quoted as responding: “We have many opportunities in mining, agriculture, tourism and manufacturing and our quest to attract investment has been marred by our bad politics and a poorly crafted empowerment law which has largely scared away investors. It is the implementation that has been chaotic, even though the law insists on ceding for value and mutual discussions as a precondition.”
“We have successfully managed to mitigate the excesses of this law but because we are an uneasy coalition, the ultimate answer will lie in a free and fair election as a precondition for a legitimate government in Zimbabwe.”
Tsvangirai will, on Thursday, hold a meeting with his Japanese counterpart, Prime Minister Yoshihiko Noda. On Friday he will give a lecture at the United Nations
University in Tokyo before proceeding to Wellington at the invitation of the New Zealand Prime Minister, John Key. The Premier will complete his tour in Australia where he was invited by the country’s Prime Minister Julia Gillard.