Zimbabwe plan scares investors

Zimbabwe's forcing of foreign firms to hand over a 51 per cent stake will scare away much-needed investment, with no clarity on how the cash-strapped state will fund its big stick approach, analysts say. The government's assurances that its "indigenisation" policy is not a nationalisation drive is unlikely to soothe nerves after platinum giant Implats capitulated last Tuesday after being threatened with a state take-over of its local subsidiary. "It is doing so much damage to the country in terms of attracting investors for job creation. The policy is very bad," Harare-based economist John Robertson said. The controversial law orders foreign-owned companies — such as mines, banks and retailers — to submit plans on how they will give up a majority share to locals. But the government has yet to come up with a clear-cut explanation how it will pay for the shares taken or even how the process will be undertaken. Massive investments The confusion comes as Zimbabwe seeks massive investments to rebuild its economy, which was devastated by a violent land reform programme in which white-owned farms were seized. A power-sharing government of rivals President Robert Mugabe and Prime Minister Morgan Tsvangirai formed after 2008 polls ended years of crisis and stabilised the economy. Negative ripples from the indigenisation policy have been felt with key projects put on hold because investors are not keen to invest without a controlling stake, analyst Erich Bloch said. "We have lost the potential to attract investment. The indigenisation policy is ill-advised and damages the economy," he said. "Which investor would want to invest where half of his investment will be taken and wouldn't have a say in the running of their businesses?"