BERNARD MPOFU
ZIMBABWE’S major mining companies are currently reviewing new measures to replace the country’s controversial indigenisation and empowerment regulations amid concern that expropriations laws could hurt foreign direct investment.
When President Emmerson Mnangagwa took over from longtime former leader Robert Mugabe in 2017 after a military coup, he swiftly said Mugabe’s indigenisation policy would be put aside and be repealed, except in relation to diamonds and platinum.
This was then seen as one of the key neo-liberal steps by the new government which was riding on goodwill and desperate to mend relations with the international community.
The then new amendment made a significant departure from the Indigenisation and Economic Empowerment Act [Chapter 14:33] as amended by the Finance Act No.1 of 2018 that allowed locals to have at least 51% only in diamond or platinum extractive industries.
Before that, it was in all minerals. A few years later, the markets were unnerved when debate on indigenisation gained traction after another set of amendments was criticised as anti-investment, particularly in the capital-intensive mining sector.
In a presentation to the Chamber of Mines of Zimbabwe’s annual general meeting, Isaac Kwesu, the organisation’s chief executive, said new measures exempt the mining sector from expropriation.
“Regularisation of the policy intent to exempt mining companies from complying with the equity threshold of the indigenisation and economic empowerment Act remained outstanding,” Kwesu said.
“Government advised of its intention to replace the existing Indigenisation Act with an Economic Empowerment legislation. A draft Economic Bill has since been shared with key stakeholders and is currently under review.
“Related to the same, the Ministry of Industry and Commerce directed the Chamber of Mines to lead the process of developing the Economic Empowerment Implementation Framework. The Chamber, through the Joint Suppliers and Producers Committee is spearheading the development of the implementation framework for the mining industry. A Draft Implementation Framework is expected to be finalised before the end of 2024.”
An amendment of section 36 of the Finance Act (No. 2), 2020, promulgated in December 2020, gave the government the prerogative to indigenise a controlling equity holding in any mineral in this country.
For perspective, section 3(1) of the Indigenisation Act under focus allowed ministers of Mines and Finance to prescribe 51% equity stake ownership by Zimbabweans only in diamond and platinum, but now they have powers to do so over all other minerals in Zimbabwe, meaning the indigenisation of mining has returned.
This led to a series of engagements between captains of industry and commerce lobbying the authorities to relax the regulations and attract more investments.
