HARARE, March 19 (Reuters) – South African sugar producer Tongaat Hulett said its spending on communities in Zimbabwe should count as equity to enable the firm comply with a black economic empowerment law.
President Robert Mugabe’s government is promoting indigenisation of company ownership, forcing all foreign-owned firms to sell a minimum of 51 percent shares to blacks.
Tongaat said it has trained farmers, bought them farming inputs and paid for roads, schools and hospitals in communities where it operates in the southern African country.
“I respectfully submit that the indigenisation law requires review to remove the emphasis on shareholding and focus on empowerment credits,” Sydney Mtsambiwa, Tongaat’s managing director in Zimbabwe told a committee of parliament.
Empowerment credits are points awarded to a company for investing in communities and count as equity, authorities say.
Mtsambiwa said the requirement for foreign companies to sell their shares as stipulated by the law was scaring off investors.
In October 2012, the government gave Tongaat two weeks to submit a plan showing how it planned to sell 51 percent of its shares in its Zimbabwean operations, or face forcible seizure.
The government has not followed through on its threat but Mtsambiwa said very few foreign investors would accept losing control of their investment.
Mtsambiwa said Tongaat was developing 4,000 hectares of virgin land to resettle black cane farmers and had already secured $20 million from banks to fund part of the project.
This is part of a plan by Tongaat to use a total of 24,000 hectares of land to resettle black farmers, he said.
Tongaat has a 50.35 percent stake in Hippo Valley Estates and wholly owns unlisted Triangle Sugar Corporation. Both firms own sugarcane plantations in southern Zimbabwe.