Some background:
- As some of you may know, Zimbabwe has had an Indigenisation Law in place for some time: a law which aims to achieve a 51% ownership of all Zimbabwean companies by indigenous Zimbabweans.
- The current interpretation of that law is…being questioned. But the practical reality is that it’s here, and that it needs to be complied with.
And what I mean by that is: it’s all good and well to call an Act, or the interpretation thereof, unconstitutional. But while you’re having that argument in court, there are steps that can be taken against you.
It’s a bit like disputing your electricity bill. You may be right that there’s an error in the reading – but if you don’t pay the bill, then you’ll be cut off. And you’ll be cut off until the matter is settled.
So going back to the Zimbabwean story, after much to and fro around this particular piece of legislation, the Ministry of Youth, Indigenisation and Economic Empowerment announced in January that there would be a new deadline for compliance: 31 March 2016. Basically: three months to become compliant.
Then on the 23rd of March (two weeks’ ago), the Minister held a press conference:
Addressing a press conference in Harare today, Youth, Indigenisation and Economic Empowerment Minister Patrick Zhuwao said Cabinet on Tuesday unanimously passed a resolution directing that from April 1 this year all line ministries proceed to issue orders to cancel licences of non-compliant businesses within their respective sectors of the economy.
“It is March 23, 2016, three months into 2016 and businesses have continued to disregard Zimbabwe’s indigenization laws as if daring our President and his Government to do something about their contemptuous behaviour.”
And suddenly, there was a flurry of activity.
Although not enough activity, because on deadline day, the Minister went a step further. From this article:
Government will go after assets of directors of foreign-owned companies in the event that a company ceases operation after failing to submit its indigenisation plans today. The move is aimed at assisting employees in the case that they lose their employment due to non-compliance of their companies. Foreign-owned firms including mines and banks were last year given a March deadline to submit plans on how they are going to comply with the indigenisation law which requires them to cede at least 51 percent shares to locals.
Youth, Indigenisation and Economic Empowerment Minister Patrick Zhuwao yesterday said he has so far sought legal help from three legal practitioners as he looks at building a strong case.
He said it is the fiduciary duty of company directors to comply with the law and any employee that will lose their job due to non-compliance of the company will be assisted by the Government to go after the directors in their individual and institutional capacity.
Here’s the direct quote:
“I am going to support any employee rendered jobless by the irresponsibility of directors or managers who fails to comply with the law. We will make sure that those employees go after those directors in their institutional and individual capacity.
“If a company stops operating because management and directors have failed in their fiduciary responsibility, I will support those workers in going after those directors. So if you are director of a non-compliant company be rest assured that I will support workers that you will have rendered unemployed to come after you.
“Certain individuals are still trying to threaten Government but it will not work and everyone serious about running a business in Zimbabwe will comply with the law.
“Further to that I have received representations from worker organisations saying that they are concerned and I told them that it is the fiduciary responsibility of directors of such companies to make sure that they look after their stakeholders including shareholders.
“The legal advice I am getting is: it is the fiduciary responsibility of directors to make sure that laws in the country that they are operating in are complied with. So if they then wilfully disobey the law, workers have a right to go after them.”
So that’s the background, right? Things are pretty serious.
On Friday, NewsDay Zimbabwe went ahead and published this article:
Company closures: Govt in major climbdown
GOVERNMENT has had a sudden change of heart and decided to put on hold a plan to revoke operating licences for all companies that have not complied with the contentious Indigenisation and Economic Empowerment Act.
All non-compliant foreign-owned firms had been given today as the deadline, failing which their operating licences would be cancelled.
But Indigenisation minister Patrick Zhuwao told NewsDay in an interview yesterday that President Robert Mugabe had directed that the plan be shelved “for now”.
“In the past few days I have conferred with my principal, the President (Mugabe), regarding the Cabinet resolution to enforce compliance with the indigenisation legislation as directed by Statutory Instrument 21 of 2010.
“Given the responses and representations we have received from industry and commerce, I am pleased to tell you that the President has directed that we, at least for now, shelve the plan to allow for wider consultations,” Zhuwao said.
Asked if it was a climbdown, Zhuwao retorted: “What do you people want? The government listens to people’s concerns and you complain as much as when we ignore. We are not going to be distracted from our main goal of empowering Zimbabweans who for over a century have watched in horror as their resources were carted away, leaving nothing for them.”
Zhuwao added: “The indigenisation policy is a government programme that we are prepared to see come to fruition. No amount of Western-sponsored or factional propaganda will stop us. We will not listen to little poodles whining in the dark.”
The minister said he will hold a conference at his offices at 9:30 this morning over the changes.
Last month, Zhuwao announced Cabinet had passed a resolution to withdraw licences from all companies that had not complied with the law by today.
The announcement was met with stiff resistance from industrialists, investors, opposition parties as well as war veterans, who accused Zhuwao of sabotaging the economy and failing to understand that Zimbabwe “needs the world more than the world needs Zimbabwe”.
Which had a lot of people relieved.
Company closures climbdown: You have been pranked
Our story in which government has reportedly shelved plans to shut down companies that have failed to comply with the country’s indigenisation policy was an April fool’s Day prank.
NewsDay was today inundated with calls of people who wanted clarification on whether indeed Indigenisation minister has shelved plans to revoke licences of non-compliant companies.
As of this morning the government position on revoking licences has not changed.
According to Wikipedia, the custom of setting aside a day for the playing of harmless pranks upon one’s neighbor is recognized everywhere. Some precursors of April Fools’ Day include the Roman festival of Hilaria, the Holi festival of India, and the Medieval Feast of Fools.
I’m genuinely speechless.
‘harmless’?!
It’s like pranking people with an article about Syria having reached a peace accord, or Donald Trump resigning from his nominee bid.
You don’t joke with the serious stuff.
Come now.
Rolling Alpha posts about finance, economics, and sometimes stuff that is only quite loosely related. Follow me on Twitter @RollingAlpha, or like my page on Facebook at www.facebook.com/rollingalpha. Or both.
