Zimbabwe’s controversial indigenisation and Empowerment legislation which aims for a local takeover of foreign owned firms came into effect Monday amid growing concerns by various sectors of the economy of its intended benefits.
The law requires locally owned foreign firms with an asset value of US$500 000 or more to cede at least 51 percent ownership to black Zimbabweans.
The foreign firms have up to 15 April to inform Youth Empowerment and Indigenisation Minister, Saviour Kasukuwere, of their shareholding structure failure of which they face fine and/or jail term of up to 5 years.
Zimbabwe Congress of Trade Unions President Lovemore Matombo told AFP Monday that the law could create a new elite of black business people who will “just replace the minority whites,” but with no direct benefit to the majority.
He warned that if the controversial law is rushed it could a process that is “chaotic just like the land reform” and affects the quick economic recovery of a country coming from a decade long financial crisis.
Critics have pointed that the law would benefit a small clique linked to President Robert Mugabe’s Zanu PF party at the expense of the whole nation.
Mugabe however defended the legislation during his 86th birthday celebrations Saturday saying the law is not meant to nationalize companies but correct “historical imbalances.”
Prime Minister Morgan Tsvangirai of the Movement for Democratic Change party has reiterated on many occasions that the indigenisation law was crafted without “wide consultations” calling it “null and void.”
Early last month independent economist John Robertson referred to law as “short sighted and destructive,” and warned the law would affect efforts to lure direct foreign investment in the country.
