Gvt announces ‘simplified’ indigenisation guidelines

Patrick Zhuwao

Youth, Indigenisation and Economic Empowerment Minister Patrick Zhuwao

GOVERNMENT has announced new Frameworks, Procedures and Guidelines for implementing the Indigenisation and Economic Empowerment Act which provide support measures for the indigenisation of the economy.

The Framework clarifies the position on the indigenisation of businesses in the resources sectors, non-resources sectors and reserved sectors and also outlines the procedures for ensuring compliance including the enforcement of Indigenisation Compliance and Empowerment Levy (ICEL) and credits while sticking to the 51/49 percent shareholding rule.

Youth, Indigenisation and Economic Empowerment Minister Patrick Zhuwao and Finance and Economic Development Minister Patrick Chinamasa said at a joint press conference Government would no longer tolerate excuses by non-compliant companies following the publication of the guidelines and frameworks.

This, Zhuwao said was guided by pronouncements made by President Mugabe at the close of the Zanu PF annual conference that Government would no longer accept companies which refuse and rejects the policy of indigenisation and empowerment in the manner in which it was inscribed.

The framework sets that an Indigenisation levy at the prescribed rate shall be levied on all businesses. The levy will be linked to the annual gross turnover of the business entities and will be determined by the extent to which the entities are supporting socially and economically desirable objectives.

“The levy shall be subject to reduction by the Compliance and Empowerment Rebate Score earned by any business. Effectively the levy can be significantly moderated by the extent to which a business simply decides to comply with the law,” said Zhuwao. The rebate can be earned from indigenisation legislation compliance rebates, good corporate citizenship rebates and indigenous shareholding rebates.

Chinamasa said Government was however yet to come up with a figure on the new levy but said the money would be pulled into a fund that will be used to support empowerment initiatives by disadvantaged groups.

Affected companies have up to 31 March to submit indigenisation implementation plans. All investment applications which will now go through the Zimbabwe Investment Authority must incorporate an indigenisation implementation plan but provision is made of two possible pathways for ensuring compliance. The two ways are; compliance through provision of a lesser share of indigenisation or/and implementation of the levy (ICEL). NIEEB will carry out a monitoring and supervisory role.

According to the Framework, the Government sticks to the 51/49 ratio in the resources sector and states the designated entities which should acquire the 51%. These entities include the National Indigenisation and Economic Empowerment Fund, Sovereign Wealth Fund, Employee Share Ownership Trusts, Community Share Ownership Trust, Zimbabwe Mining Development Corporation, Zimbabwe Consolidated Diamond Company and any other company incorporated by Government or in which Government has a controlling interest.

The non-resources sector provide for net asset value, lesser share and maximum period for businesses to indigenise. Companies in the manufacturing sector have up to four years to ensure compliance while the remainder, including financial services, tourism, education and sport, culture, engineering and construction, energy, telecommunications, transport have one year.

 SectorLesser ShareYears to comply
1General Notice 459 of 2011  – Manufacturing26%
1st Year
2nd Year
3rd Year
4th Year
 General Notice 280 of 2012 – Other Sectors  
2Financial Services51%1 Year
3Tourism51%1 Year
4Education and Sport Arts and Entertainment51%1 Year
5Culture51%1 Year
6Engineering and Construction51%1 Year
7Energy51%1 Year
8Services51%1 Year
9Telecommunications30-51%1 Year
10Transport and Motor Industry51%1 Year

The Framework also calls for the establishment of clear, consistent and non-discretionary guideline on the ‘lesser share’ principle and the weighting of socially economically desirable objectives as a percentage to be applied towards achieving the minimum 51% shareholding. Some of the objectives which qualify for quotas include SMEs and Micro-Financing, Youth Programmes, Vocational Training, National and Economic Empowerment Charter, Value Addition

The framework re-emphasizes 16 sectors that are reserved for indigenous Zimbabweans, some of which include agriculture, transportation, retail, barber shops and beauty salons, employment and estate agencies, bakeries, cigarette manufacturing, milk processing, fuel retailing and artisanal mining of all minerals except diamonds.

“No new non-indigenous businesses will be allowed to invest in the reserved sector unless under special cases as determined by line ministries and approved by Cabinet,” reads parts of the Framework adding that the provisions in the ZIA Act will be harmonised so that there are no inconsistences in the legal frameworks between the ZIA Act and the IEE Act.

All Government departments, statutory bodies and local authorities are now required to procure 50% of their goods from local businesses. FinX

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