Review of indigenisation linked to EU rescue package

Zimbabwe Stock Exchange

By Tichaona Sibanda
SW Radio Africa
4 June 2014

The ruling ZANU PF government is so desperate for cash it appears to be willing to modify its controversial indigenisation policy.

It is believed the party has taken this route to ensure the ongoing re-engagement efforts with the European Union (EU) remain on track, as there is likelihood the government will receive a direct multi-million dollar rescue package from Brussels.

The party is also desperate for the EU to drop restricted travel measures against President Robert Mugabe and his wife Grace.

Almost $320 million is up for grabs from the EU, which indicated that the money will be made available as soon it lifts the restrictive measures it still has in place against the first family. Mugabe and Grace are the only two that remain targeted after the EU removed the bulk of the restrictions.

Luke Zunga, an economist and chairman of the South African based Zimbabwe diaspora development chamber, said the usually intractable party has realised the only way of attracting investment is to change their policy on indigenisation.

Zunga told SW Radio Africa’s weekly Hidden Story program that the fact cabinet and the politburo have prioritised discussions on the policy means they’ve realised it’s preventing investment.

On Tuesday, President Robert Mugabe’s cabinet ordered Empowerment Minister Francis Nhema to craft a paper clarifying government’s position on the Indigenisation Act. On Wednesday the politburo was set to deliberate on the proposed amendments to the indigenisation law.

‘The indigenisation policy has been fundamentally wrong from the beginning. There is no way you can grow an economy by taking away somebody’s business. Such a practice does not represent growth, it is merely distributing ill-gotten wealth to others to destroy,’ Zunga said.

He explained that such populist acts appeal during an election period because people want to get something for free.

‘But as a policy for developing an economy and encouraging investment it falls flat. There is pressure from South Africa for them to change the law.

‘EU companies are also pressurising their government to take action against the policy…and that is where re-engagement starts,’ added Zunga.

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