PRESIDENT Emmerson Mnangagwa’s trademark “Zimbabwe is open for business” mantra — which has now gone mute — has effectively been thrown out the window officially in one fell swoop after government clandestinely reverted to the late former president Robert Mugabe’s damaging indigenisation policy on mining.
This has spooked investors who have always thought mining provides the most attractive prospects — a silver lining — in Zimbabwe’s dark economic cloud.
Mining was a safe haven for investors seeking to enter the local market or grow their existing investment portfolios.
The country is reeling from a deep structural and functionality economic crisis triggered by leadership, governance and policy failures.
An amendment of Section 36 of the Finance Act (No. 2), 2020, promulgated in December 2020, now gives the government the prerogative to indigenise a controlling equity holding in any mineral in this country.
For perspective, the 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 indigenisation of mining has returned.
An analysis of Mnangagwa’s unexpected move to revert to Mugabe’s indigenisation policy on mining done by Manokore Attorneys, a local commercial law firm, raises important points and also ominous warnings about the dangers of the move.
The analysis — on the next page — unpacks Section 36 of the Finance Act (No. 2) 2020 on indigenisation, promulgated in December 2020.
Several ministers say they are not aware that the Zimbabwean government is reverting to Mugabe’s indigenisation policy on mining.
“I have seen what you have sent to me, but to be honest I’m not aware of this policy shift. It’s hidden under the Finance Act amendment,” one minister said.
The operative part of the recent amendment, Section 36 of Finance Act (No. 2), 2020 (“Section 36”) gives power to ministers of Mines and Finance to prescribe minerals that must be indigenised.
This makes the ministers the new driving force behind indigenisation.
When Mnangagwa took over in 2017 through a coup, he swiftly said Mugabe’s indigenisation policy would be put aside and be repealed, except in relation to diamonds and platinum. This effectively undermines and throws out the window the regime’s “Zimbabwe is open for business” mantra.
The new amendment marks 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