Zimbabwe’s government says compliance with its indeginization law is at very slow pace. The legislation requires all foreign owned firms with assets of more than 500,000 dollars to cede or sell a 51-percent stake to locals.
The ruling Zanu-PF party says the law is meant to empower the country’s black majority. But opposition groups, some economists and civic groups fear that it would deter foreign investors from doing business in Zimbabwe.
The government has given the companies that are yet to comply with the law until March 31 to do so.
As that deadline approaches the indeginization minister Patrick Zhuwao has told parliament that compliance is low.
Government has proposed a 10 percent empowerment levy on all firms yet to meet the empowerment threshold. As a further measure to encourage compliance it plans to introduce three categories of rebates. The incentives will recognize companies’ adherence to the laws but also good corporate citizenry, which takes into account contributions to community development projects.
The empowerment law promulgated in 2008 remains a contentious issue in the country. Some blame it for scaring away critically needed foreign investment. Despite those reservations however, the government says there’s no going back. In December, last year President Mugabe said his government would not tolerate any companies that fail to comply this year.
