Zimbabwe Indigenisation Policy

2043 Words Mar 13th, 2013 9 Pages
April 22, 2012
Zimbabwe’s Indigenisation Policy Africa possesses vast mineral resources, from diamonds to platinum, which remain untapped. Recently discovered ore deposits and soaring commodity prices are attracting miners from around the world to Africa. This has led to “resource nationalism”, as African countries are looking for ways to maximize their share of the profits from the mining. All over Africa countries are increasing taxes and royalties on mining companies in an effort to maximize those profits but none go as far as Zimbabwe, which is employing an “Indigenisation Policy” that requires foreign companies to be 51% owned by indigenous Zimbabweans within five years.
Indigenisation policies have existed in Zimbabwe since it won
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Until then, Zimplats will be allowed to maintain majority control over the company. However, being forced to give up majority control in their own companies and the unpredictable nature of the Zimbabwean government are enough deterrent to drive foreign investors away from Zimbabwe and towards other African countries with similar resources but with friendlier and more stable governments, especially since large mining operations require billions of dollars and years before they are profitable.

Mineral resources are spread out so foreign investors have a choice of where to invest. Zimbabwe’s economy has finally shown signs of growth in the past two years thanks to improvements in agriculture, tourism and especially mining. However, poverty and unemployment remain widespread. Zimbabwe will require foreign investment in order to continue its upward trend since Zimbabwean banks simply do not have enough funds to lend to the private sector, which hinders the growth potential of businesses. Foreign companies will also create jobs for the local population and create a trickle down effect that will benefit entire communities as money flows into the economy. There is a difference between a country ensuring that it enjoys the benefits of its own natural resources and a country driving away foreign investment. In most cases, foreign mining companies are not opposed to increasing the stake of the local population. As part