Zimbabwe gives foreign firms 14-day ultimatum

Reuters News
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Posted: Aug 19, 2011 2:42 PM
Zimbabwe gives foreign firms 14-day ultimatum

By Nelson Banya

HARARE (Reuters) - Zimbabwe's government has given foreign companies including miners and banks a 14-day ultimatum to submit plans on how they propose to transfer majority stakes to local owners or risk losing permits, state media reported on Friday.

But central bank governor Gideon Gono immediately issued a statement criticizing the announcement, saying it had created panic in the financial sector and risked halting the country's fragile economic recovery.

The targeted firms include platinum miners Zimplats, which is majority owned by Impala Platinum (Implats), and Mimosa, an Implats' 50-50 joint venture with Aquarius Platinum.

Others include Rio Tinto's Murowa diamond mine, British American Tobacco and local units of British banks, Standard Chartered and Barclays.

Indigenization and Empowerment Minister Saviour Kasukuwere wrote to the companies on July 28, informing them they had failed to provide acceptable details of how they propose to transfer 51 percent shareholdings to local people within the five years stipulated by law, the state-controlled Herald newspaper said.

The companies risk losing their operating licenses if they do not submit plans on transfer of ownership that are deemed acceptable, the newspaper reported.

Gono said, however, the central bank remained the sole authority to issue and withdraw bank licenses and had no intention of taking action against the foreign-owned banks.

His comment was a sign of the divisions within the government over the controversial empowerment policy.

"As stated before ... the financial sector ought to be treated with a great deal of circumspection," Gono said in a statement.

"This is necessary in order to avoid fly-by-night, reckless and excitable flexing of muscles and decisions that overlook certain fundamentals that could irreparably harm the nerve-center of our recovering economy."

In March, Kasukuwere gave mining firms 45 days to file empowerment plans and imposed a September 30 deadline for the transfer of ownership.

The deadline to submit empowerment plans has since passed.

Last month, Kasukuwere said the government had rejected 175 empowerment plans from mines, which mostly had proposed selling 25 percent of their shares and making social investments in infrastructure, health and education to obtain credits for another 26 percent.

Zimbabwe's coalition government set up by President Robert Mugabe and his rival Prime Minister Morgan Tsvangirai two years ago following disputed elections is divided over the implementation of the empowerment law, enacted in 2008 and championed by the president's ZANU-PF party.

Tsvangirai has warned that the law threatens Zimbabwe's economic recovery, which started after the formation of the power-sharing government in 2009, following a decade in which GDP shrank by as much as 50 percent, according to official figures.

(Editing by Jane Baird)