Thursday, 1 April 2010

Zim no go area: German business group

Zim no go area: German business group

Harare - A German business delegation has cancelled a visit to Zimbabwe, put off by Harare's controversial plan to force foreign-owned firms to cede controlling stake to local blacks. The German African Business Association (GABA) said the trip had been called off because Zimbabwe has become a "no go area" for foreign investors following promulgation of the empowerment laws that give foreign-controlled business up to 2015 to sell majority stake to indigenous Zimbabweans or face punitive levies and taxes from the government. "Under the current circumstances Zimbabwe is a 'no go' area for foreign investment," said Andreas Wenzel regional manager for southern Africa for the GABA that was helping organise the visit. Wenzel held out hope that the delegation investors from Hamburg and the German Southern African Chamber of Industry and Commerce in Johannesburg could still come to Zimbabwe at a later stage this year but said this would depend on the outcome of consultations within the Harare power-sharing government over the empowerment laws.

Cancellation of the German visit comes a week after Norway announced that it was putting on hold a US$1,5 million project to assist Zimbabwe's agriculture sector because of the indigenisation law. Zimbabwe Indigenisation Minister Saviour Kasukuwere announced last month that all foreign-owned businesses, including banks, mines and factories must offload at least 51 percent of their shareholding to locals by March 2015. Kasukuwere, a top loyalist of President Robert Mugabe, gave companies up to the end of this month to submit to him plans showing how they will transfer shareholding to black Zimbabweans. The indigenisation rules have been a source of controversy and besides rattling foreign investors have further divided Zimbabwe's shaky coalition government with Prime Minister Morgan Tsvangirai's MDC party pushing to have the laws repealed or drastically changed. While the coalition government has said it is reviewing the indigenisation laws, Mugabe and his Zanu PF party – who still wield greater power in the unity government – insist the empowerment drive must go ahead, ignoring warnings that this could scare away foreign investors whose funds Zimbabwe needs to rebuild its shattered economy. Critics fear Mugabe's Zanu PF wants to press ahead with transferring majority ownership of foreign-owned companies as part of a drive to reward party loyalists with thriving businesses.

Hat Tip: JP

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