Zimbabwe’s president, Robert Mugabe, has announced his intention to fully enforce the highly controversial “Indigenization and Economic Empowerment Act” IEEA, which aims to force foreign owned businesses to transfer at least 51 percent of their shares to Black Zimbabweans.
The law, which was initially passed in 2008, has generated a lot of discussion and confusion since its enactment, making it very difficult to implement. Enclosed in a signed statement which Mugabe intends to be adopted as a “policy position”, the president argues that the indigenization programme is “motivated by losses sustained by Black Zimbabweans at the hands of the colonial power.”
Despite the President’s justifications on the issue, enlightened members of his cabinet are yet to take a stand on the implementation of the law, putting into consideration Zimbabwe’s economic challenges and its financial sector which is hanging delicately in the balance.
However, the president has defied members of his party and cabinet to stand behind the bill and issue an ultimatum to all affected businesses – comply or close shop.
What next? Will there be compliance or will Zimbabwe lose out on its Foreign Direct Investment? Time will tell.