CZI hails industry’s indigenisation rules

firms and urged its members to comply saying the rules gave them ample time to comply.
In terms of the Indigenisation and Economic Empowerment Act foreign-owned firms are compelled to indigenise at least 51 percent of their equity.
Foreign-owned manufacturing firms with a minimum value of US$100 000 are compelled to localise 26 percent of their shareholding within the next 12 months and to fully indigenise after four years.
To fully comply, non-indigenous firms are required to release 10 percent to indigenous Zimbabweans during the second year, 10 percent in the third year and 5 percent in the final year, according to an Extraordinary Government Gazette published two weeks ago.
Flexible regulations agreed for the manufacturing sector took into cognisance the serious capacity and financial constraints industry is grappling.
The sector appears to be the most affected of all amid revelations US$2,5 billion is required for new machinery and to raise production.
Manufacturing firms, which have seen capacity utilisation rise 13,5 percent to 57,2 percent, have borne the brunt of stiff competition from low-priced and often better quality imported products.
And regulations for the manufacturing sector represent a marked contrast from the framework under which mining firms will have to comply.
Mining companies, because of the strategic and finite nature of minerals, have been directed to immediately submit compliance proposals under which they have to immediately start localising 51 percent equity.
The Confederation of Zimbabwe Industries held extensive consultations with Minister Saviour Kasukuwere during which he addressed the industrial body’s national council on at least two occasions and clarified issues that were of concern to the members.
In addition, CZI mounted roadshows and held symposiums in four regions, namely Manicaland, Mashonaland, Matabeleland and Midlands chambers where members were afforded the opportunity to interact with Minister Kasukuwere. Prime Minister Morgan Tsvangirai also attended one of the symposiums.
Furthermore, CZI submitted written position papers to the indigenisation ministry and most of the submissions were taken on board. “We also had some of our members serving in various committees of the National Indigenisation and Economic Empowerment Board,” said CZI president Dr Joseph Kanyekanye.
“The new regulations are reasonable in that they allow companies to gradually build up towards the target of 51 percent as they start as low as 26 percent over the next 12 months; and they give ample time for consultation as companies work towards full compliance of 51 percent. CZI therefore encourages its members to co-operate in their efforts of achieving the desired target,” he said.
Manufacturing is one of the four major pillars of the economy and is this year expected to contribute about 13 percent to the gross domestic product.