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Tsvangirai rejects 'indigenous' law
Rules requiring firms to be black-controlled not passed by cabinet, Zimbabwe PM says.
Last Modified: 10 Feb 2010 08:00 GMT
Tsvangirai said that the regulations were 'null and void' as they had not passed his cabinet [File: AFP]

Zimbabwe's prime minister has dismissed the official announcement of government legislation requiring all businesses operating in the country to be 51 per cent owned by blacks.

Morgan Tsvangirai, who sit in a power-sharing government, said on Wednesday that the law would not be implemented as it had not been approved by his cabinet.

The so-called "Indigenisation and Economic Empowerment" regulations set out a maximum jail sentence of five years for officials from companies that fail to cede majority control to black Zimbabweans.

"I am in charge of all policy formation in cabinet and neither myself nor the cabinet were shown these regulations before they were gazetted," Tsvangirai said a statement.

"They were published without due process as detailed in the constitution and are therefore null and void."

The law was passed in 2008 when parliament was still dominated by supporters of Robert Mugabe, the president, but it had never been implemented.

Political bickering

Although it is a year since the two rivals agreed to form a power-sharing government, political differences between Tsvangirai's Movement for Democratic Change (MDC) and Mugabe's Zanu-PF continue to affect the administration. 

"For existing businesses it will bring a complete stop to replacement investment. It's very grim"

John Robertson, economist

"In terms of stopping the economic haemorrhage, we have succeeded," Nelson Chamisa, the MDC spokesman, told the Reuters news agency before the indiginisation law was announced.

"The inclusive government has fallen victim to bickering and unnecessary politicking, particularly from our colleagues in Zanu-PF," he said.

But Patrick Chinamasa, the justice minister and a senior Mugabe advisor, hailed the fact that the government has lasted an entire year.

"There is commitment to continue co-operation in the inclusive  government and meeting the challenges that lie ahead," he said.

Racial composition

Under the indigenisation law, all businesses with assets of more than $500,000 would have to submit a form detailing the racial composition of their current shareholding to the government by mid-April.

Based on the declaration, the government would assess how much of the company's shareholding had to be "ceded" to "indigenous Zimbabweans".

The country's minister of indigenisation will keep of list of "suitable candidates", to whom shares can be ceded.

John Robertson, a Harare-based economic commentator, told the DPA news agency that the move would "put a stop to any possibility of new investment".

"For existing businesses it will bring a complete stop to replacement investment. It's very grim."

Zimbabwe's economy grew by 4.7 percent last year, the first growth in a decade.

Multinational mining companies, like South Africa's Impala Platinum and Rio Tinto, are seen as most likely to be most effected by the new law.

At the World Economic Forum in Davos, Switzerland, last week, Harry Kenyon-Slaney, Rio Tinto diamonds and minerals chief executive, indentified indigenisation programmes as "the only threat to our operations."

Civil service strike

Meanwhile, Zimbabwe is also being hit by an open-ended strike by the country's 230,000 civil servants, who are demanding a five-fold pay rise.

"I think the majority is on strike," Tendai Chikowore, who heads a council gathering the public servants' unions, said on Tuesday.

"We would like to see a response from the government. If not, we will enforce the strike on the ground."

Civil servants were lured back to work one year ago with the offer of salaries paid in US dollars, but now they want their pay raised to $630 a month.

They say their the $150 they are currently paid does not cover basic living expenses.

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