Zimbabwe’s Inigenization and Empowerment Act was signed into law in 2008 requiring foreign owned companies to give up 51 percent of their shares to indigenous Zimbabweans.
The Act was heavily contested by the business community and foreign direct investments declined as a result.
In 2018, the Act was relaxed meaning foreign investors could have full ownership in most sectors except for the Diamond and Platinum mining sectors. Abandoning the policy completely could potentially drive foreign investments into the Diamond and Platinum sectors as well as, revive the country’s ailing economy. During an interview in Washington D.C, Finance Minister, Mthuli Ncube said,
“We are removing that indigenization rule, which is discouraging foreign direct investment”
“We say Zimbabwe is open for business; you can only be open if you allow ownership of 100 percent.”
The change in policy is to drive production in platinum mining, the country holds one of the largest platinum reserves in the world. Change in ownership rules could also be extended to the diamond mining sector. Although the finance and mines ministries have expressed changing the rules to attract investments, parliament will need to approve the new legislation.
Emmanuel Chilamphuma is a Senior Analyst at Edgebold Capital
