Zimbabwe’s Prime Minister Morgan Tsvangirai rejected legislation signed into law by President Robert Mugabe that forces companies to sell more than half of their shares to black investors, saying it would “scare off” foreigners.
“The regulations would have scared off foreign investors, already jittery about Zimbabwe as an investment destination,” Tsvangirai said in a statement posted on his Web site yesterday. “Without foreign direct investment in Zimbabwe, it will be difficult to kick-start the national economy.”
While it is certainly shocking, given past Government action in Zimbabwe, that there is any awareness of the necessity to maintain or enhance foreign direct investment in that country, it is significantly more surprising that the Prime Minister was able to reject President Robert Mugabe revision to the company law.
Under the law, companies operating in the country with assets worth more than $500,000, including Anglo American Plc and Old Mutual Plc, must sell 51 percent of their local units to black investors within five years, according to a copy of the law distributed by Harare-based Veritas Trust yesterday.
For now, due to improper internal governmental consultation, and the action of the PM, that law will not come into force.