White business executives in Zimbabwe will be forced to ensure that blacks have a 51-per-cent controlling interest in their companies within the next five years, according to a draconian new law published Tuesday. The so-called "Indigenisation and Economic Empowerment" regulations say that by mid-April, all businesses have to submit a form detailing the racial composition of their current shareholding to the government.
Based on the declaration, the government would assess how much of the company's shareholding had to be "ceded" to "indigenous Zimbabweans." Any business missing the deadline faces a maximum penalty of five years in jail, according to the regulations. A yet-to-be-named "minister of Indigenisation" would keep a list of candidates to whom shares could be ceded.
White businesses that appoint black employees as a "front" to avoid being taken over would face going to jail to five years, the law said. "It's going to put a stop to any possibility of new investment," said economic commentator John Robertson. "For existing businesses it will bring a complete stop to replacement investment. It's very grim."
The law came within a week of Prime Minister Morgan Tsvangirai saying at the World Economic Forum in Switzerland that "confidence has returned" to Zimbabwe following a decade of economic collapse. "This is the time to look at the country in a more positive light," he said. Last year President Robert Mugabe declared that there would be "no nationalisation" of business in Zimbabwe.
The law includes a let-out clause that allows for a lesser black shareholding "in order to achieve other socially or economically desirable objectives." The regulations take effect on March 1 and companies have 45 days in which to complete and submit to the government a form that gives the names, nationality and identity details of their shareholders, and whether they are"indigenous" or "non-indigenous" Zimbabweans.
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