3 July 2014

Zimbabwe: Indigenisation - Chinamasa Differs With Nhema

FINANCE minister Patrick Chinamasa on Thursday said the government was on track to meet targets under the International Monetary Fund's Staff Monitored Programme (SMP) and will go ahead with amendments to its empowerment law as part of the reforms.

Zimbabwe began the SMP in June last year but in January this year requested an extension after failing to meet the December timelines. If successful, the programme could help it clear $10 billion in external debts and give it access to new credit from international lenders.

"I received an email from the IMF last week congratulating us for the little that we have done this year. They see promise at the end of the day," Chinamasa said, adding that government had made some progress in the financial services and mining sectors.

"They (IMF) feel that the train is now moving in the right direction including also our efforts to clarify the indigenisation law. Generally speaking we are in the right direction.

"My own conclusion of what is now taking place is that there is good rhythm within government, a more purposeful rhythm of where we are going."

Youth and indigenisation minster, Francis Nhema last week told Parliament that he was not working on any amendments to the law.

The law limiting foreign ownership is perceived as unsettling to investors.

"As you now know, the matter was debated in cabinet, in the (Zanu PF) Politburo and Cde Nhema has been charged with the task to come up with a framework that clarifies the law on indigenisation. I am aware there is a team working on it to produce that output," Chinamasa said.

He said the central bank would resume its role of banker to government by the end of this month while efforts were underway to recapitalise the bank to the tune of $200 million.

The interbank trading had resumed, although Chinamasa said it had not reached levels he was happy with.

He said despite five banks being undercapitalised, they were not a threat to the sector. Banks are required to maintain capital levels of $25 million, which will be increased to $100 million by 2020.

"The three or four or five banks which are ill, because of their size are not contagious on the general financial services sector," he said.

He said liquidity challenges would be addressed in the long-term once the productive sector had been resuscitated.


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