Indigenisation non-compliant companies face closure

20 Mar, 2016 - 00:03 0 Views

The Sunday News

Harare Bureau

FOREIGN companies resisting Zimbabwe’s indigenisation programme will not be required to pay non-compliance (empowerment) levies and will instead be shut down come 1 April, 2016, a Cabinet Minister has said.

The Confederation of Zimbabwe Industries (CZI) and economists have reacted by urging companies to comply with the law, while also counselling Government to be cautious so as to protect the economy. In December 2015, President Mugabe said non-compliant companies would not be allowed to operate from 2016.

Youth, Indigenisation and Economic Empowerment Minister Patrick Zhuwao then followed up with a non-compliance levy and a 31 March, 2016 deadline. However, only 50 established firms submitted their indigenisation plans to the Zimbabwe Investment Authority, with the remainder maintaining indifference. None appeared disposed to paying non-compliance penalties either.

The Indigenisation and Economic Empowerment Act requires shareholding of 51/49 percent weighted in favour of locals in in all companies with a minimum value of

US$500 000. Certain sectors are wholly reserved for indigenous businessperson.

The law provides support measures for indigenising the economy and empowering indigenes historically disadvantaged by colonialism.

In an interview with our Harare Bureau, Minister Zhuwao said many companies had demonstrated “total disregard for the law” by failing to submit indigenisation plans.

“We will now, instead, put in place appropriate measures to invoke Section 5 of the Act which calls for cancellation of licences of non-compliant companies. In attempting to make the companies comply, we had initially come up with the idea of a levy that could be moderated by the extent of compliance. However, on further reflection and consultation, we realised that such a levy would be payment for companies to continue disregarding the law. I, as minister, would have been complicit in committing an illegal act, and enabling companies to break the law is contrary to the spirit and intent of a constitutional democracy like Zimbabwe.”

On managing investor perceptions, Minister Zhuwao said the law should always be laid down, moreso where investment is concerned.

 

Share This: