1 August 2014

Zimbabwe: Banks Indigenise

TWO foreign banks have complied with indigenisation requirements over the last three months, signalling the easing of protracted disagreements over foreign financial institutions' position on the issue.

In an interview with Businessdigest on Wednesday, Indigenisation minister Francis Nhema Nhema said the two banks are part of 75 companies from across all economic sectors that have complied during the last three months.

There were serious disagreements between then Indigenisation minister Saviour Kasukuwere and Former Reserve Bank governor Gideon Gono over the manner in which the foreign banks should be indigenised during the tenure of the inclusive government.

Nhema could not be drawn to reveal the names of the two banks.

He said the 75 companies that have complied with the legislation requirements are from various sectors of the economy.

"We have 75 companies that have complied with the indigenisation requirements in the last three months," Nhema said. "They range from mining, manufacturing, ICT, retail to real estate."

The minister said this demonstrated that there was progress in discussions between companies and government in complying with the requirements of the Indigenisation Act.

On the establishment of Community Share Ownership Trusts (COSTs), Nhema said government approached companies operating in the areas set up for the share ownership schemes to assist with funding.

"We are asking companies operating in those areas to assist with operational money for CSOTs," Nhema said. "We are aware that companies are stretched financially which is why we want to come up with a win-win situation."

CSOTs are a vehicle for participation in shareholding in various businesses by communities. The proceeds from such participation must be properly accounted for and used in projects which benefit the communities

Of the 61 CSOTs set up, only 15 are up and running with the remaining 46 in their formative stages and still to get seed capital.

On the suspended Youth Fund which was discontinued due to the 78% default rate, Nhema said the fund's trustees were yet to appraise him on the criteria to be used when the fund comes back into operation.

He stressed that there were no amendments being made to the Indigenisation Act, adding that should there be any changes he would announce them as the minister responsible after presenting them to cabinet.

Last week Speaker of Parliament Jacob Mudenda told foreign diplomats during a tour of the Norton Special Economic Zone that sections 3 and 4 of the Act gave the minster too many discretionary powers adding that he was "happy" that the minster was working with speed to amend the Act.

The minister said the underfunded National Indigenisation Economic Empowerment Board responsible for issuing compliance certificates, was discussing with Treasury and was set to receive a financial injection to help fund its operations.

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