ZIMBABWE – Zimbabwe’s largest sugar producer Tongaat Hulett (Tongaat) says government must review the indigenisation policy and consider empowerment credits for business sustenance in favour of compulsory acquisition of 51 percent share-holding.
Sydney Mutsambiwa, the Tongaat chief executive last week told Parliament that the implementation of indigenisation — with emphasis on the disposal of shareholding in an economy currently experiencing liquidity challenges instead of focusing on broad-based empowerment — made it difficult to attract investments.
“Accordingly, the indigenisation laws require review to remove emphasis on shareholding and focus on empowerment credits for sustainability,” he said.
Mutsambiwa conceded that Tongaat — majority owned by South Africa’s Tongaat Hulett — has not yet complied with the indigenisation regulations despite submitting a proposal in March 2012.
This comes as the sugar producer has been under immense pressure to comply with the country’s indigenisation laws which compel foreigners to cede 51 percent shareholding to locals.
Critics say the regulations, which came into effect in 2010, scare away foreign investment due to their lack of clarity.
Tongaat’s legal counsel, Sternford Moyo of Scanlen and Holderness also noted that the ceding of 51 percent shareholding to locals for the purposes of complying with the indigenisation law was in two parts.
“There are two ways in which the 51 percent threshold is achieved. Firstly, by simply disposing of 51 percent and thereof comply with the law.
“Secondly, the (Indigenisation) minister is given power in terms of the law to recognise the empowerment credits in lieu of disposing 51 percent,” said Moyo.
He added that the Indigenisation Act did not actually stipulate how long the period will be in which a company is allowed to implement empowerment credits instead of disposing 51 percent.
“The minister can only do so by limiting the period during which the company is allowed to comply with that regulation. But having said that, the Act does not actually limit the period in which the minister can do so, in other words it does not say it can be limited for five years or 10 years or for 20 years,” he said.