16 January 2013

Zimbabwe: Kasukuwere to Clash With Gono, Biti

Youth Development, Indigenisation and Empowerment, Saviour Kasuku-were is expected to clash with Finance Minister Tendai Biti and Reserve Bank of Zimbabwe governor Gideon Gono after he threatened to tighten the screws on banks that "continue to flout" the country's indigenisation law.

Zimbabwe's empowerment law compels foreign-owned institutions to cede 51 percent of their shareholding to locals.

Biti, who had previously told Kasukuwere to stay off banks in his indigenisation campaign, recently indicated that the indigenisation law was being misinterpreted by Kasukuwere's ministry, which has threatened to seize substantial shareholding in banks under the empowerment law.

Biti said: "The law does not say that every foreign-owned company shall be 51 percent-owned, the law says it is the intention to reach the destination of 51 percent ownership, so it is discretionary. A peremptory interpretation is therefore wrong."

Gono has also previously criticised Kasukuwere for fuelling instability in the banking sector at a time of severe liquidity challenges.

Standard Chartered, Stanbic and Barclays are the three international banks now on Kasukuwere's radar. Ecobank last week announced that it had complied with the country's indigenisation requirements.

Speaking at a ceremony where Impala Platinum, the world's second-largest platinum miner, sold a majority stake in its Zimbabwe unit, Zimplats, to local investors for US$971 million, Kasukuwere said: "I would like to encourage other companies, particularly in the banking sector, to comply with our national laws as non-compliance will no longer be tolerated."

"Uncalled for defiance and arrogance will not be tolerated as all companies must respect the law and desist from provoking the State. There will be no sacred cows, no stone unturned to ensure that the policy is fully implemented," Kasukuwere said.

He said the programme of indigenisation and economic empowerment was a national approach designed to benefit all indigenous Zimbabweans on a broad basis by guaranteeing broad participation in economic activities.

"The legal instruments implementing the policy decisions of government direct that where exploitation of natural resources is involved communities, employees and the nation at large must participate as key indigenous shareholders," he said.

He said his ministry had achieved value for communities around the country in the form of shares in mining companies in excess of US$1 billion. Apart from this capital value due to communities, the trusts set up for this purpose would benefit from annual dividends declared by mining companies.

"In addition, more than US$110 million dollars has either been pledged or paid out to community share trusts by mining companies as seed capital for initial community projects," Kasuku-were said.

Kasukuwere said more than 800 companies in the ministry's data base had proposed to dispose shares to employees through employee share ownership schemes.

"This in itself will benefit hundreds of thousands of workers throughout the country as part ownership schemes of the business. It is therefore apparent that the greatest beneficiaries of the programme to date are not well to do individuals but board based masses," he said.

Kasukuwere said this programe was in line with keeping Zimbabwe's international obligations as a State to eradicate poverty within the framework of the Millennium Development Goals by harnessing resources exploitation for the good of communities, employees and Zimbabweans.

Under the deal, Implats will transfer 51 percent of Zimplats to Zimbabwean investors as follows: 10 percent to the community, 10 percent to Zimplats employees and 31 percent to the State-controlled National Indigenisation and Economic Empowerment Fund.

The fund, which officials say has US$2 billion of assets, is headed by retired general Mike Nyambuya and administered by Kasukuwere.

Zimplats will provide a loan to the new shareholders at annual interest of 10 percent. The debt is to be repaid through dividends over 10 years while management of Zimplats will remain with the company.

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