Zimbabwe's Indigenisation Minister, Francis Nhema speaks about policy under which foreign-owned firms have been forced to sell majority stakes to local blacks. However, with the economy so desperate for capital - some estimates put domestic credit demand at 12 billion US dollars, more than double total bank deposits, analysts say president Robert Mugabe may be forced to soften his anti-foreigner stance. The policy aims to help black Zimbabweans, as they faced discrimination during white minority rule, which ended in 1980.
SHAMVA, ZIMBABWE (REUTERS) - Zimbabwe is not softening its drive to force foreign-owned mines to sell majority stakes to blacks, but could be flexible with banks if they agree to lend more, especially to young people, a cabinet minister said on Thursday (November 21).
But Francis Nhema, the new youth and economic empowerment minister said those reviews did not signal a major policy shift toward mining companies.
"There's no letting up because we are now moving in a broad based economic empowerment policy which involves everyone from the gardner up to the chief executive. So everyone has to be involved in the economic empowerment and the creation of wealth. So government is not letting up. In actual fact, government is even saying let all companies take care and know that all people are involved in the economy of the country," said Nhema.
A team set up by the government in 2010 recommended that locals could own up to 40 percent shares in foreign-owned financial services firms but the central bank has urged caution when it comes to banks.
"The basic industries must be run by Zimbabweans wherever possible but in cases where our people are not able to compete favourably competitively, we will always look at it and say how else can they partner other individuals from outside to make it possible. We don't want a situation where to buy an orange here is five times more expensive than the imported one but we also take cognisance that we must protect the industry that we have and give them incentives, give them tax breaks so that the individuals here in this country can make a difference and be able to play in the same industry," added Nhema.
Analysts, however, say there is some hope of recovery in the country's tobacco industry, where state and private support for small-scale farmers is expected to push production to 200,000 tonnes from 45,000 in 2008.
Many also see huge potential in mining and diamonds if the government can assuage concerns over forced sales of stakes to locals.
"There is no one size; each sector is different and we are engaged in every sector from agriculture to energy to mining to hotel industry to other industries and we look at different sections and say what is the best solutions for them because we realise the amount of capital required in all those areas is different so there is no one size fits all, we will bring them as stake holders to discuss how best we can have a winning situation. Remember the whole idea of economic empowerment is the creation of wealth, is the creation of employment and making sure that companies do not close down. But at the same time that our people benefit from the process; they benefit from the industries that we have in this country," said Nhema.
The government has said it expects the economy to grow by 6.1 percent in 2014 from 3.4 percent in 2013 on the back of rising revenues.
But that figure is tempered by estimates that put domestic credit demand at 12 billion US dollars, more than double total bank deposits.