EU challenges Mugabe

THE European Union (EU) has challenged President Robert Mugabe's government to implement constitutional provisions to assure international investors that its one-size fits-all indigenisation policy would not affect future investments into the country.

In an interview with NewsDay over the weekend, EU head of delegation to Zimbabwe, Aldo Dell'Ariccia said as much as Mugabe's remarks on the indigenisation policy were commendable, investors would need to see legislation being put in place to assure them of the security of their investments.

The indigenisation policy, which compels foreign-owned companies with a minimum shareholding of $500 000 to sell 51% of their shareholding to locals has largely been blamed for scaring away foreign direct investments.

The Zanu PF government initially defended the policy claiming it was crafted to empower the previously marginalised black majority.

However, Mugabe and Finance minister Patrick Chinamasa have lately been assuring potential investors that that the policy had been relaxed.

Dell'Ariccia said: "The EU has noted with great interest the declarations by President Mugabe and minister Chinamasa about the flexibility of the indigenisation policy and the fact that it will not be applied with a one-size-fits-all approach. I think that is good news for any investor, not just European ones.

"The declarations of intentions of the government of Zimbabwe are most welcome. Now we are waiting to see how these declarations are translated into concrete legislative acts (approved by Cabinet and gazetted) and implementing policies with rules and regulations which are accessible, transparent, verifiable and applied equally to all."

One of the concerns among analysts with regards the indigenisation policy was that it lacked clarity and transparency.

Dell'Ariccia said that Zimbabwe needed to ensure the indigenisation policy does not stand in the way of a predictable economic environment adding that "non-discrimination" was equally essential if the country's efforts at attracting foreign investors were to bear the desired fruits.

"The predictability of the economic and financial environment, based on a legal framework that grants the respect of the principles of accountability, transparency and non-discrimination is an essential condition to attract foreign investors," Dell'Ariccia said.

"The circulation of capitals and gains should be regulated by clear policies and reliable mechanisms should be in place to solve any dispute."

Tourism and Hospitality Industry minister Walter Mzembi is on record saying that Zimbabwe needed a "sober" approach towards the indigenisation policy.

Dell'Ariccia said it was essential for Zimbabwe to strike a balance between national interests and laws on international finance.

"Sobriety is an interesting concept. However, it seems to refer to the fact of avoiding too much greed from the side of the indigenising partner. I think that rather than a sober approach, Zimbabwe needs a clear approach, based on a sound compromise between national interests and the laws on international finance," Dell'Ariccia said.

He said that Zimbabwe's economic revival was hinged on huge capital injection from foreign investors hence it was critical for the country to put in place investor friendly policies.

Dell'Ariccia said Zimbabwe needed to restore its relations with international finance institutions as well.

"Zimbabwe has a great potential of becoming once again, the economic hub of the Southern African region. The human capital is there, the natural conditions are favourable and the resources are vast.

"What is needed is to re-launch the economy and reactivate the productive sector, infrastructure and the modernisation of the industrial plants. A proper influx of capital is crucial in this framework hence investor friendly policies and a proper relation with the international finance institutions are essential," Dell 'Ariccia said.