By Alois Vinga
INDUSTRY Minister, Mangaliso Ndlovu says that all promises made by foreign investors to donate seed capital to community share ownership trusts (CSOTs) are mere pledges which cannot be legally enforced since there is no statutory provision granting such authority.
Briefing Parliament’s Indigenisation and Economic Empowerment Committee, Wednesday, Ndlovu reminded legislators that money running into millions of dollars which had been promised by foreign investors under the country’s murky empowerment laws are nothing more than mere pledges.
“Most of the companies have not paid anything but all the same, the commitments and promises they made cannot be legally enforced and can just be classified as pledges reached through mutual consent. Even before the amendment of the Indigenisation Economic Empowerment Act there was never a provision enforcing the payment of money to what we can only CSOTs,” he said.
Ndlovu revealed that companies exploiting natural resources have paid paltry US$39 million against commitments totaling US$129 million meant to be seed capital in the CSOTs.
He said, the recent amendments to the Indigenisation and Economic Empowerment Act are such that it will no longer be mandatory for any businesses extracting a strategic mineral or natural resource to avail 10 percent shares to CSOTs.
Ndlovu said that the arrangement may result in the dis-empowerment of Zimbabweans who had previously benefited from indigenisation transactions as they may be forced out of investments by their foreign partners seeking controlling stakes in businesses. He proposed a Statutory instrument that makes corporate social responsibility compulsory.
“I therefore, propose the inclusion of compulsory corporate social responsibility programs in the Statutory Instrument which should also make it compulsory for companies that had pledged seed capital to CSOTs to honor such pledges,” he said.
CSOTs were established by government to ensure broad based economic empowerment of Zimbabweans noting that 70 percent of them reside in the rural areas and were historically neglected.
The Indigenisation and Economic Empowerment Act was amended last year to limit majority ownership by state entities to only diamond and platinum. Government this week indicated it was working on the possibility of scrapping the requirement altogether.
The law was introduced during former President Robert Mugabe as part of his nationalistic policies that have been blamed for scaring away investors as well as causing Zimbabwe’s near two decades long economic problems.
Foreign investor confidence dipped as a result, prompting a promise by President Emmerson Mnangagwa to re-look at the law under his “Zimbabwe is Open for Business” policy.