Zimbabwe Prime Minister Morgan Tsvangirai Thursday said the country’s laws that force foreign firms to cede majority stakes to local blacks is driving away desperately needed foreign investment.
“That policy discord is what has led to the crisis of investment in this country,” Tsvangirai told his Movement Democratic Change supporters as he launched the party’s economic blueprint in Harare.
The two-year-old “indigenisation” law compels all foreign-owned companies to surrender 51 percent of their share holding to black Zimbabweans in an attempt to reverse the inequalities caused by the country’s colonial past.
It is a key area of contention between Tsvangirai and his coalition government partner, President Robert Mugabe.
The three-year-old power-sharing deal helped prevent the southern African country from tipping into a full scale conflict and stabilised the economy after bloody elections in 2008.
“Our plan is to transform Zimbabwe into a newly industrialised nation within a generation,” said Tsvangirai in what is seen as a precursor an electoral platform, ahead of a 2013 vote to end the uneasy coalition government.
“We intend to raise Zimbabwe from failed state status where perception and suspicion run riot within the investor community whenever Zimbabwe is mentioned as a possible investment destination.”
Tsvangirai said the indigenisation policy pushed by his rival Mugabe is not the solution to the investment crisis and a runaway unemployment rate of over 80 percent.
“The crisis we face… is opportunities for jobs,” he said.
Tsvangirai who is to face Mugabe in the election said the country needs to respect investors’ property rights if it is to revive moribund industries.
On Wednesday, Indigenisation Minister Saviour Kasukuwere, a member of Mugabe’s ZANU-PF party, warned that foreign companies which fail to comply with the controversial law will face prosecution.
Tapiwa Mashakada, Zimbabwe’s Economic Planning Minister and deputy secretary general of the MDC said investors are avoiding Zimbabwe and instead choosing the booming economies of Angola and Mozambique.
The law “kills investor confidence. You cannot bring your money to invest in Zimbabwe when someone takes over 50 percent. Capital is timid,” said Mashakada.
Several companies like Zimplats, the Zimbabwean unit of South African’s Impala Platinum, and Anglo American Platinum‘s mine in Zimbabwe, Unki, have submitted their plans to hand over majority shares to local people.