(Bloomberg) -- Zimbabwe passed a law that compels all businesses with assets worth more than $500,000 to be 51 percent black-owned within five years, according to a copy of the law distributed by Harare-based Veritas Trust.
The law was published in the Government Gazette, a public document. It comes into effect March 1 and stipulates prison sentences of up to five years for non-compliance. Veritas is a Harare-based non-governmental organization that monitors the passage of laws through parliament and their publication.
The new law may affect companies including Anglo Platinum Ltd., Impala Platinum Holdings Ltd. and Aquarius Platinum Ltd., three of the world’s four biggest producers of the metal, which all own mines in the southern African nation. Old Mutual Plc, Africa’s biggest insurer, owns properties and a life-insurance operation in the country.
“The news is very grim,” John Robertson, a Harare-based economist, said in a phone interview today from the capital. “It will effectively put a halt to any further investment in Zimbabwe, ironically just as the country is calling for investment.”
Zimbabwe has the world’s second-largest reserves of platinum and chrome, after South Africa, along with deposits of gold, coal, diamonds and nickel. The economy is recovering from a decade of recession that followed Zimbabwean President Robert Mugabe’s seizure of white-owned commercial farms to redistribute to black subsistence farmers deprived of land during colonial rule. The program slashed exports.
Disposal Plans
The new law states that “every existing business” must submit forms detailing ownership of companies by April 15, along with plans for the disposal of 51 percent of their shareholdings to black Zimbabweans.
Businesses that fail to comply after a 30-day reminder will be guilty of an offense and liable to a fine and or a jail sentence of as much as five years, according to the gazette.
Spokesmen from Mugabe’s Zimbabwe African National Union- Patriotic Front, which pushed the bill through parliament, didn’t answer calls to their offices or mobile phones today. Mugabe’s spokesman, George Charamba, didn’t answer calls to his office either.
The law, known as the Indigenization and Empowerment Act, was passed by parliament in 2008 without being signed into law by Mugabe. Zanu-PF controlled parliament from 1980 until March 2009, when it lost elections to the MDC.
Old Mutual’s London-based spokesman Matthew Gregorowski couldn’t immediately comment when contacted on his mobile phone today.
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