HARARE– Advisory firm Brainworks Capital on Thursday said only one indigenisation deal had been consummated by government, while transactions worth over $1 billion with major platinum mining firms Anglo American Platinum, Impala and Aquarius had been abandoned.
Zimbabwe’s Indigenization Act — enacted in 2008 — requires foreign owned companies valued at over $500,000 to cede 51 percent to black locals. The local ownership law has been cited as a major impediment to foreign investment in an economy battling to recover from a decade-long recession.
While President Robert Mugabe’s government has promoted the policy as the centrepiece of its economic programme, very little progress has been made towards localising ownership of major businesses, analysts have said.
Brainworks, which worked as the government’s consultants in the indigenisation transactions, said only the $18 million Blanket mine deal with Canada-listed Caledonia had been completed.
Appearing before a parliamentary committee, Brainworks chief executive George Manyere said his firm provided advisory services for the Zimplats deal whose indigenization transaction amounted to $781 million; Mimosa, $325 million; Unki, $126 million; Blanket Mine, $18 million and Pretoria Portland Cement, $12 million.
“In this particular case, the transactions were abandoned and there was no success to them and in that context we just abandoned everything,” Manyere said, in response to queries about how much Brainworks had been paid for its services.
He said the firm had only received payment for the Blanket mine transaction but declined to disclose the fee.
However, based on the two percent charge Brainworks levied on each transaction, it is likely to have received around $360,000 for the $18 million deal.
“Chairman, as we mentioned earlier on, our mandate letter was very specific and we indicated in there that when we obtained these transactions they were at different stages of progression and in that the only one which went as far as shares being exchanged was Blanket Mine, everything else was never completed and we never got anything,” said Manyere.
“We never got paid a cent, either by the company that was indigenized or by the National Indigenisation and Economic Empowerment Board (NIEEB) and we spent a year working on these transactions. Even for all the costs of travel, accommodation, time we spent negotiating with the various companies — we never got any compensation.”
Two years ago, Brainworks, which said it was hired without going to tender, was reported to be embroiled in a payment dispute with Zimplats over a $16,7 million fee relating to the platinum miner’s indigenisation transaction.
Zimplats declined to pay, saying it had not hired Brainworks and that the bill was NIEEB’s responsibility.
In February 2013, NIEEB chief executive Wilson Gwatiringa wrote to Zimplats asking the company to pay Brainworks $16,7 million “representing fees for the provision of advisory services to the government of Zimbabwe and the (NIEEB) in the implementation of the Zimplats indigenisation plan.”
In January this year however, government gave business 60 days to amend indigenisation agreements with the state as part of changes to the law.