Zimbabwe’s local ownership conundrum – a timeline:

Zimbabwe’s local ownership conundrum – a timeline:

HARARE, April 12 (The Source) – Zimbabwe’s President Robert Mugabe on Tuesday announced major changes to his government’s empowerment policy, indicating the controversial law could be amended to reflect softening local empowerment demands on foreign mines and banks.

Analysts have long criticised the policy, saying it has deterred the foreign direct investment Zimbabwe needs for its economic recovery. Conflicting policy pronouncements by officials, including Mugabe himself and government ministers, have not helped the situation, critics say.

Mugabe, who has been in power since Zimbabwe’s independence in 1980, signed the Indigenization and Economic Empowerment Act  into law on March 9, 2008, days before general elections held that year, making it the centrepiece of his campaign.

Here are key events around the controversial law:

March 2011 – Government publishes a statutory instrument whose main provision was to compel mining companies with a net asset value of or above US$1.00 (rather than companies with an asset value of or above US$500,000 as set out in the Act). Implementation plans were to be submitted to the Minister within 45 working days of the Statutory Instrument’s publication, while a September 25 deadline was set for the disposal of 51 percent of shares to indigenous Zimbabweans.

November 2012 – World number one platinum miner Amplats signs a preliminary local ownership deal with the Zimbabwe government, which would see a 51 percent stake valued at close to $143 million being taken up by the National Indigenisation and Economic Empowerment Fund (21 percent), mine employees, a community trust and unnamed local investors taking 10 percent each. Under the agreement, the transaction would be funded through dividends due to the new shareholders over the next 10 years.

December 2012 – The world’s second largest platinum miner, Implats, and its joint venture partner Aquarius, agree to a $550 million deal to cede majority control of Mimosa Mine, Zimbabwe’s second largest platinum mine. The Mimosa transaction would be financed through a loan provided by Impala and Aquarius to the Zimbabwean government, payable over a period of 10 years. The loan would bear an annual interest rate of 9 percent and settled through the waiver of the right to receive 90 percent of dividends from Mimosa mine. The Zimbabwean government would pay in cash any outstanding balance at the end of the 10-year period.

January 2013 – The government of Zimbabwe and Implats announce a preliminary agreement which will see the miner selling a majority stake in its Zimbabwe unit Zimplats to locals for $971 million in a vendor financed deal.

September 2013 – Former Environment Minister Francis Nhema is appointed Indigenization Minister.

November 2013 – Mines Minister Walter Chidhakwa says government could let foreign-owned platinum mining firms own majority shares in their local operations if they build a refinery in the country.

October 15, 2014 – Indigenization Minister Francis Nhema says only one foreign-owned banking institution operating in the country had not complied with country’s local ownership requirements

December 2014 – Newly appointed Indigenisation Minister Chris Mushowe says Zimbabwe will not beg for foreign investment and urges foreign investors to comply with the local ownership law. Later that month, during the 2015 National Budget presentation, Finance Minister Patrick Chinamasa announces that the indigenisation law would be amended to give more discretion to line ministries “that are more knowledgeable about the dynamics of sectors which come under their responsibility.

January 15, 2015 – Government amends the Act, giving businesses 60 days to amend indigenisation agreements with the state, and also empowers line ministers to assess plans and issue certificates of compliance to business.

September 2015 – Mugabe appoints Patrick Zhuwao, his nephew, to the indigenisation portfolio

December 2015 – Finance Minister Patrick Chinamasa and Indigenization Minister Patrick Zhuwao have a public fallout over implementation of the law. A planned joint press conference to clarify the law degenerates into farce and Chinamasa later releases a unilateral statement outlining ‘revisions’ to the law, which is published in the Government Gazette under his signature.

January 2016 – Finance Minister Patrick Chinamasa and Indigenization Minister Patrick Zhuwao declare a truce, hold a joint press conference announcing a new framework for implementation of the law. While there were no fundamental differences between the two sets of guidelines, the revised text dropped, from the list of objectives for the new guidelines, a reference to “encourage private sector investment” from Chinamasa’s earlier public notice.

An expanded list of ‘objectives’ in Zhuwao’s text also gave priority to raising cash for a raft of state-run funds and firms.

March 22, 2016 – Zhuwao announces that Cabinet unanimously resolved that line ministries would revoke the operating licences of all firms deemd to be non-compliant with the Indigenisation Act after a March 31 2016 deadline.

March 31, 2016 – Minister Zhuwao backs off threats to take precipitous action and close foreign firms deemed to be non-compliant with the country’s local ownership law, but accuses the central bank governor of misleading foreign banks over the regulations.

April 3, 2016 –  Finance minister Patrick Chinamasa releases a statement stating that foreign banks operating in Zimbabwe have complied with the country’s indigenisation law, prompting Indigenization Minister Zhuwao to issue a counter-statement accusing Chinamasa of trying to shield non-compliant banks from complying with the law.

April 12, 2016 – President Mugabe releases statement acknowledging the confusion created by conflicting positions by his officials on the indigenisation policy and indicating the government could amend the law to reflect a new relaxed position on mine and bank ownership. Existing foreign-owned mines could maintain current shareholding on condition they keep upwards of 75 percent of their earnings in the country. Banks could gain exemption from local ownership rules if they supported key economic sectors, Mugabe said.