Zimbabwe gives 13 foreign firms ultimatum to sell off majority stakes

Aug 19, 2011 12:00 AM

Zimbabwe's government has given 13 foreign firms an ultimatum to sell off majority stakes to local partners to comply with a new law or risk being taken over.
“Barclays Bank, Standard Chartered, 6 mining companies and 5 other firms have been given a two-week ultimatum to submit acceptable indigenisation plans or risk losing their licenses with the government taking over ownership,” a report said. “The companies were required by law to submit indigenisation plans detailing how they intend to meet the 51 % direct equity participation by locals within five years, it reported.

Some of the affected companies including the food multinational Nestle, platinum miner Zimplats and British American Tobacco received letters dated July 28 signed by indigenisation minister Saviour Kasukuwere, and officials told no responses had yet been received.
“If the companies fail to rectify their non-compliance, the minister is empowered under the indigenisation act to institute proceedings to cancel their licenses.”

A new indigenisation law requires all foreign firms to sell 51 % stakes to black Zimbabweans, with companies given up to September 25 to submit proposals on how they plan to comply.
The new law is strongly supported by veteran President Robert Mugabe but has created tensions within the unity government, with Prime Minister Morgan Tsvangirai arguing that it will discourage investment. Mugabe had defended the regulations as a measure to correct the economic imbalances created by Zimbabwe's colonial past.

Zimbabwe is in the process of rebuilding its economy following nearly a decade of political and economic crisis that ended with the formation of a unity government between Mugabe and Tsvangirai two years ago.
Foreign mines operating in the country include London-listed Aquarius Platinum, Australian-listed Zimbabwe Platinum Mines, Anglo Platinum and Rio Tinto.

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