Harare – Foreign companies in Zimbabwe have been left scrambling in the dark about their future after the deadline for complying with the indigenisation policy closed last night.
The uncertainty intensified this week when Youth, Indigenisation and Empowerment Minister Patrick Zhuwawo insisted that the government would cancel the operating licences of companies that failed to comply.
The move, which has been described as an albatross around the country’s already struggling economy has left South African companies such as Standard Bank, Impala Platinum, Nedbank, Aquarius Platinum, Anglo Platinum and Tongaat Hulett in the lurch.
Zhuwawo said the government had tried to meet businesses half way by delaying the implementation of the law for more than a year, but the firms had refused to comply.
“The companies that do not comply with the law risk having their licences revoked,” he said. “So people can own companies but those companies cannot operate until they are licensed to operate.”
The policy has attracted criticism from experts who have described it as a setback for efforts and initiatives to attract investment.
Lobby group Buy Zimbabwe said the deregistration of operating licences for non-compliant foreign groups would plunge the economy into crisis.
Spokesman Oswell Bimha said the directive was tantamount to condemning Zimbabwe to continued economic decline and abject poverty.
“This issue of government trying to decimate the private sector is very unfortunate and uninformed. Threatening to close companies shows a lack of understanding of the economy and forces of economic prosperity,” Bimha said.
Foreign firms have thus far remained resilient to the country’s economic woes, riding on access to liquidity backed by their international parent companies.
But senior executives have raised concerns on the legislation, citing Rio Tinto pulling out of the country last year and Barclays’s intention to follow suit as examples of how the law has left foreign investors feeling jittery.
They added that penalising companies would destabilise the economy. “The March 31 deadline is arbitrary and allows for no room for the companies affected to consult with boards and shareholders because this issue is beyond management,” said one.
The Zimbabwe Investment Authority’s chief executive, Richard Mbaiwa, said: “Since we were given the mandate to handle the applications, we have received 35 proposals.”