Zimbabwe suspends indigenisation

Government on Wednesday clipped the wings of Youth Development Indigenisation and Empowerment minister, Saviour Kasukuwere, in a charm offensive to lure investors amid revelations that potential investors were scared by the empowerment legislation.

The empowerment law states that locals should have 51% in all companies operating in the country and had unnerved investors needed to help rebuild the economy devastated by a decade of hyperinflation.

In his mid-term Fiscal policy presentation, Finance minister, Tendai Biti, said government had agreed to exempt new investors from complying with the clause that states that at least 51% should be given to locals to align the empowerment of the people to the country's efforts to attract new investors.

"In respect of new FDI, FDI will not have to comply with Section 3 of the Indigenisation and Empowerment Act, that is, the 51% rule. However the Indigenisation and Empowerment Act and the Investment Act should be amended to require from foreign investor their own their localisation plans, be it, listings or share employee trusts," Biti said.

Biti said the latest measure was arrived after government agreed that the country needs investors to expand the economy which has been underperforming. He said he was revising growth projections to 5,6% from the initial forecast of 9,4%. He said revenue collection would end the year at US$3,4 billion down from the original US$4 billion due to the underperformance of diamonds and the drought experienced this year among others.

He said the first half of 2012 has been a sad balance sheet of unmarked targets resulting in a long winter of despair characterised by low business confidence and generally a business as usual approach.

He proposed austerity measures underpinned by a cash budget system. He said the wage costs consuming over 70% of the expenditure costs are an elephant in the living room so are foreign travel costs which at US$19 million continue outstripping other  expenditures.

Biti said ministries that are collecting revenue should remit it to treasury accusing the ministry of Home Affairs singling out the Registrar General's Office and Police as notorious.

Biti said in the second half of the year, there will be a freeze on recruitment and any dispensation will be subjected to concurrence of Treasury and the Public Service Commission.

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