GOVERNMENT is planning to exempt companies investing in proposed special economic zones from the country’s controversial indigenisation and labour laws, as pressure mounts for an economic turnaround ahead of 2018 national elections.
President Robert Mugabe’s government gazetted the Special Economic Zones Bill just before the close of last year. The Bill has provisions to protect foreign and local investors from investor unfriendly laws. The Bill is set for debate early this year when Parliament resumes sitting after the festive season.
Applied wantonly, the Indigenisation and Economic Empowerment Act — which stipulates that locals should have a minimum of 51 percent in any foreign-owned business operation — has only served to scare away foreign investors from the impoverished, but resource-rich, southern African nation that is better known for violently seizing commercial farming land from whites.
After many years of struggling to attract direct foreign capital because of its controversial indigenisation laws, the Bill signals a major climb down from the policy that has even affected a number of existing foreign-owned firms.
Last year, global resources giant, Rio Tinto Plc, left Zimbabwe after government announced that it was taking over its lucrative diamond firm, Murowa Diamonds, to merge it with a motley of bankrupt surface diamond companies operated by the State, the military and some Chinese firms to form one company called the Zimbabwe Consolidated Diamond Company, an entity in which the State would have a majority shareholding.
The Bill also seeks to give tax exemptions for investors in the proposed economic zones as well as suspend some of the country’s pro-worker labour laws that make employment costs prohibitive to prospective investors.
Dangote Holdings, owned by Nigerian businessman, Aliko Dangote, which has promised to invest over $1 billion in the cement making, coal mining and power generation sectors of the Zimbabwean economy, is set to become one of the first licensed operators in these proposed special economic zones.
South African edible oils processor, Willowton, is setting a US$40 million manufacturing plant in Mutare, while global beverages giant, PepsiCo, is also establishing a US$30 million manufacturing plant in Harare.
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