By Hillary Munedzi
The Government of Zimbabwe has repealed the controversial Indigenization and Economic Empowerment Act which required foreign companies to cede 51 percent of their shares to locals and the new Economic Empowerment bill is set to attract Foreign Direct Investment (FDI).
Hon Sekai Nzenza, the Ministry of industry and Commerce is on record advocating for policies that influence the revival of the economy.
Economic policy reform in Zimbabwe has not resulted in improved socio-economic welfare for the populace. Consequently, economic decline has resulted in widespread political discontent and disaffection with the previous regime under Robert Mugabe, but the second republic has made a commitment to reform and try to attract serious investors.
“The nation is being informed that the principles are intended to create resource and administrative structures for supporting the economic empowerment of citizens. The principles will repeal the Indigenisation and Economic Empowerment Act [Chapter 14:33] and pave way for the enactment of the new Economic Empowerment Act.
The Second Republic attaches special importance to opening up the nation for business, hence the promulgation of the Finance Act No. 1 of 2018 which amended the Indigenisation and Economic Empowerment Act. It will be recalled that the amendment removed the 51/49 indigenization shareholding cap,” reads the twenty-eighth cabinet press briefing.
Zimbabwe has failed to attract meaningful investors with a majority of them staying on the fence citing that the country has inconsistent policies and unfriendly economic policies which deter investment. A lot of policies have been formulated but they are not bearing any fruit.
“A country’s economic or social development depends heavily on the various policies being adopted in the economy. Hence a good policy should entail a better development pace. Well, the question now becomes what is a good policy?
“There is a common name that defines good policies that do not work, or that end up not working. The term is “blueprint.” A well-drafted economic policy should be easily adopted, well-funded, and accurately implemented through proper communication between sectors of the economy and economic players. An economic policy is a course of action that is intended to influence or control the behavior of the economy,” said economist Wellington Bonga.
Most African countries have made much progress in improving the quality of their economic policies over the past 20 years, after many years of disappointment and stagnation, and the results are evident. There is improved macroeconomic performance – growth is up, inflation is down, and external and fiscal imbalances have narrowed. However, there is clearly a need to do more. Growth must be raised to achieve a significant reduction in poverty and offer Africa’s rapidly rising population a chance for a better life and the new policy will try to mend the ailing Zimbabwean economy.
“The new Economic Empowerment Act will be aligned to the Constitution of Zimbabwe; to National Development Strategies; to Vision 2030; to the United Nations Sustainable Development Goals; and to the African Union Agenda 2063. The formulation of the draft Bill will be undertaken through a multi-stakeholder consultative process under the Whole-of-Government Approach.
The new law will provide for the establishment of the National Economic Empowerment Fund, mainly through Treasury funding. The Act will also establish a Corporate Social Responsibility Framework; and training will be operationalized under the National Entrepreneurship Training Framework of the Manpower Planning and Development Act,” reads the press briefing.