ZIMBABWE – Zimbabwe’s new indigenisation and economic empowerment minister Patrick Zhuwao says he is pushing for the enacting into law of the 10% empowerment levy on foreign-owned companies.
The levy will be used to fund black empowerment programmes. Zhuwao, who is Zimbabwean President Robert Mugabe’s nephew, told journalists in Harare on Tuesday that if given the nod, the levy would be operational in 2016. The government expects to rake in US$93 million.
He suggested that in the following year, 2017, the percentage levy should be raised to 12,5%. “The 10% will be levied on companies’ gross revenue,” Zhuwao said. Zimbabwe’s investment law says foreign-owned companies with a capital base of US$500 000 should sell 51% shareholding to locals.
The foreign-owned companies could alternatively cede 10% shareholding to employees, another 10% to community share ownership trusts the companies operate in, and then the remainder of 31% to the National Economic Empowerment Fund.
Zhuwao, who was appointed minister last month, said foreign-owned companies that were yet to comply with the indigenisation laws would be levied the 10%, while those that would have complied would be spared, depending on how far they would have gone with the indigenisation pacts.
“There will be discounts for the companies, with regards to their levels of indigenisation. If a company is 100% indigenously owned, there would be no need to pay the levy. If a company has complied 73% with the indigenous laws, it will get 73% discount,” the indigenisation minister said.
Zimbabwe holds its National Economic Empowerment Strategy (NEES) conference next week where critical issues will be identified which will be incorporated into the NEES. “Deliberations will focus on unlocking economic empowerment opportunities in order to ensure that indigenous Zimbabweans participate and contribute meaningfully to the nation’s economic growth and development,” Zhuwao said.
There have been reports in the past of the Youth Fund being looted largely by Zanu PF supporters, of which most of them have failed to repay the loans. Also, fears are that community share ownership scheme funds have been plundered.
There have been calls for Zimbabwe to relax its business environment if it is to woo investors, while government has been urged to do away with or review downwards several taxes such as the export levy.
The International Monetary Fund (IMF) has urged Zimbabwe to rejig its indigenisation policy and simplify the empowerment laws.
The IMF has revised growth prospects for Zimbabwe, from 2,8% down to 1,5%.