The International Monetary Fund on Monday urged Zimbabwe to clarify its controversial policies that bar foreign companies from holding majority stakes in local enterprises. “This step will go a long way toward allaying negative perceptions on the security of investments and property rights,” Domenico Fanizza, a senior official from the IMF’s Africa department, said in the capital Harare.
“This will encourage mutually beneficial partnerships between domestic and foreign investors.” Zimbabwe’s President Robert Mugabe in 2007 enacted a law that forces all foreign-owned companies to hand over a majority stake to locals.
The law forced mining firms, including the country’s biggest platinum miner Zimplats and international banks such as Ecobank, to cede 51% of their shares to locals. Mugabe argued the campaign empowered black Zimbabweans. But critics say the frequent changes to the law have been a key factor in hobbling the country’s once vibrant economy, which has now been on a downturn for over a decade. Central bank chief John Mangudya last month said vital foreign investment more than halved in the first six months of the year, and urged the country to make itself more welcoming to international companies. Clarifying the law would “provide legal transparency and predictability, and reassure markets of the government’s open invitation to invest in Zimbabwe,” said Fanizza.
Finance Minister Patrick Chinamasa said that the government is working to “clarify” the indigenisation policies, along with other debt and tax reforms to improve its investment ratings. “We are committing ourselves to… structural reforms that improve our investment environment,” he said at a joint press conference. “We are going to work very hard to make sure that we reduce the level of the wage bill.” Fanizza last week said the IMF would not give Zimbawe fresh financial aid until Mugabe’s government pays arrears. Harare spends an estimated 80% of money raised on paying public employees, he added.
The country is saddled with debts of over US$ 10bn (€ 7.8bn), according to an AFP tally of finance ministry figures, and has struggled to make repayments. “We have to mobilise the international community, the creditors to see how we can address our debt situation through either cancellation or rescheduling,” Chinamasa said.