BANKS are set to begin complying with the indigenisation requirements by initially implementing employee share ownership schemes, Youth Development, Indigenisation and Empowerment Minister Saviour Kasukuwere has said. The minister said the banks indicated that they were now ready to implement the share ownership schemes in partial fulfilment of their indigenisation compliance plans. In terms of Indigenisation Act, all foreign-owned companies are required to cede at least 51 percent of their equity to indigenous parties.
"Banks have, out of their own volition, come out and said they are now ready to set up their employee share ownership schemes, which will be at least up to 10 percent of their shareholding," he said.
Asked about the timelines for the implementation of these employee share ownership schemes, Minister Kasukuwere said "very soon".
This marks the first step in which banks will begin to implement their indigenisation compliance strategies. Early last month, Mr Kasukuwere's ministry announced additional frameworks for compliance for a number of economic sectors through the General Notice 280 of 2012.
These sectors, including the banking sector, had remained outstanding following the initial announcement of the first two sector frameworks for compliance with the Indigenisation and Empowerment Act on mining and manufacturing last year.
The General Notice 280 of 2012 states that all financial institutions have one year to comply with the 51 percent indigenisation requirements.
Basically, an employee share ownership scheme is a contribution plan that provides a company's workers with an ownership interest in the company.
ESOPs are envisioned in the Indigenisation and Economic Empowerment (General) Regulations of 2010. Under such schemes, companies provide their employees with stock ownership, typically at no cost to the employees. Shares are given to employees and are held in the scheme's trust until the employee retires or leaves the company, or earlier diversification opportunities, creating an opportunity for workers to amass long-term savings and benefits from their work.
The implementation of banks' ESOPs appears to have tensions between the banking sector and the indigenisation authorities. The board of the Reserve Bank of Zimbabwe met at the end of last month and resolved that they are in full support of the Government's indigenisation and empowerment policies.
But the RBZ believes that the indigenisation law should be reconciled with other relevant existing laws.
"The implementation of the Indigenisation and Economic Empowerment provisions has to be done in harmony with the Banking Act and Regulations, the Reserve Bank of Zimbabwe Act, the Exchange Control Act and Regulations, the Companies Act, the Mines and Minerals Act, the Zimbabwe Investment Act and other existing legislations," said RBZ in a statement.