Mugabe denies company rule U-turn

Zimbabwean President Robert Mugabe has denied that a controversial Zimbabwean law is to be shelved.

Mr Mugabe's comments contradict the Prime Minister, Morgan Tsvangirai -reflecting the rift in the uneasy coalition government.

The rules, which force companies valued at more than $500,000 (£324,000) to be majority-owned by "indigenous" people, were issued on 1 March.

This effectively ruled out ownership by white Zimbabweans or foreign firms.

Rift

President Mugabe said reports that the "indigenisation law" would be suspended were "completely false", and instead a cabinet committee was merely studying the law to improve it.

Indigenisation Minister Saviour Kasukuwere, a fellow member of the president's Zanu-PF party, also confirmed the law was going ahead.

Prime Minister Tsvangirai's office had said the rules were now "null and void" pending further consultations.

The apparent dispute highlights the continuing rift in Zimbabwe's coalition government between Mr Mugabe's Zanu-PF party and Mr Tsvangirai's Movement for Democratic Change.

The two parties have been in coalition together since February last year, under a governing agreement that ended decades of rule by Zanu-PF and that brought to an end political violence around the 2008 presidential election.

The country's stock market has fallen by 10% since the law's introduction, with mining shares losing 20%.

Analysts said the law had served to deter much-needed foreign investment in the country.

"A lot of concerns have been raised by a number of companies in the mining, manufacturing and tourism sector that the regulations would scare away potential investors," Zimbabwean journalist Brian Hungwe told the BBC.

Even so, he said the move to repeal the law came as a "huge surprise" after President Robert Mugabe had recently defended the law and said it would not be reversed.

Prime Minister Morgan Tsvangirai has repeatedly criticised the law.

Bread basket

Under the so-called indigenisation law, companies owned by non-indigenous people were given five years to sell a 51% stake to indigenous people. They were given 45 days to submit proposals on how this would be done.

An "indigenous Zimbabwean" had been defined as "any person who before the 18 April 1980" - the official founding date of Zimbabwe - "was disadvantaged by unfair discrimination on the grounds of his or her race".

The law was seen as an extension of the government's policy of seizing white-owned farms and giving them to locals, which started more than 10 years ago.

That programme is considered by many to have failed, as many seized farms have remained dormant.

As a result, Zimbabwe - once known as the bread basket of Africa - has become a net importer of food.
Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/1/hi/business/8619492.stm

Published: 2010/04/15 09:17:45 GMT

© BBC MMX

This is so very sad Kipper. Now businesses that are now successful will collapse as farming has already.

I take it that

An "indigenous Zimbabwean" had been defined as "any person who before the 18 April 1980" - the official founding date of Zimbabwe - "was disadvantaged by unfair discrimination on the grounds of his or her race".

Please enlighten us further as to how you think this might play out.

Kenya brought this rules into place some 20 years ago and so did Tanzania. It lasted for about 5 years I think and then they got rid of it completely.
No offense to any race or colour however when a company is started by one person or a set of individuals that believe in their work; when you are forced to sell 51% shares you have no real control anymore. Those who purchase or come into the company do not have the same "feeling" or energy to move on. The results is mainly negative -

That's exactly the law in the UAE. Nobody complains about that!

Many countries particularly in the developing world have such laws.

E.g. FIJI - foreigners are not allowed to own Fiji soil!

It's not necessarily hindering any success and therefore benefit to the countries.
It just has to be managed wisely to not offend and restrict.

The "western" countries have experienced what it means to their economies when there are almost NO rules.

E.g. Germany - there is almost NONE German food company left. We are totally depending on to the American food companies.

Opening up withour restrictions is very dangerous as we see all over the places in Africa where the Chinese almost buy out the governments.
Partcularly Zambia and Kenya, Tanzania are experiencing the Chinese impact now.
Namibian do experience the same: Chinese are allowed to open up loan companies offering cheap money to the indigenous people well knowing they cannot pay the money back. Then the Chinese take over their land and slowly become the biggest land owners in Namibia.

It's not an easy project - have to watch it closely.