White-owned companies in Zimbabwe will be forced to hand control to black businessmen under laws reminiscent of those that led to the seizure of the nation’s farms.
The regulations demand that companies, including foreign firms, hand over at least 51 per cent of ownership to “indigenous” Zimbabweans.
Thousands of businesses, including the operations of Barclays bank, Standard Chartered bank and mining company Rio Tinto, will be affected. They must submit their plans to comply by March 1. Owners who fail to comply will face jail sentences.
The regulations were passed by President Robert Mugabe’s Zanu-PF party before the 2008 election in which the opposition Movement for Democratic Change won control of the legislature.
The rules were put on hold until supplementary regulations were drawn up by the government, which quietly published them last week.
While companies have five years to comply, the effects will be felt long before then.
Indigenous Zimbabweans are defined as anyone who was “disadvantaged by unfair discrimination on the grounds of his or her race and any descendant of such person” before independence in 1980.
It means white Zimbabweans are excluded, and the position of Zimbabwean Asians is open to question.
Whites are barred from some sectors altogether, including agriculture, retail and transport, as well as barbers and beauty parlours. Harare’s business community was left in shock by the development. One banker said: “This is absolute madness.”
A fuel trader said: “These regulations are theft of any business in which whites have an interest; it’s just like the farms.”
Nick Cobban, a spokesman for Rio Tinto, described the regulations as “draconian and unworkable”. The company operates a diamond mine in Zimbabwe that it considers has potential for expansion but has not developed “partly because of the uncertainty”.
Alistair Smith, director of media relations for Barclays Group, said the firm was “considering the implications”.
Daniel Ndlela, an eminent regional economist said: “There will be no foreign investment into Zimbabwe. Why would anyone come into Zimbabwe with $100 and be left with $49?”
It is not clear exactly how the 51 per cent stake is supposed to be acquired.
The law has plunged Zimbabwe’s coalition government into crisis. Morgan Tsvangirai, the leader of the Movement for Democratic Change and prime minister, told The Daily Telegraph the move had been made without his knowledge.
“They were published without due process and in contravention of the global political agreement [which set up the coalition] and constitution of Zimbabwe and are therefore null and void,” he said.