Calls for empowerment levy implementation

Africa Moyo and Itai Mazire

President Mugabe launching a community share ownership scheme under the indigenisation and empowerment programme
President Mugabe launching a community share ownership scheme under the indigenisation and empowerment programme

A push to introduce an Indigenisation and Empowerment Levy has been revived to ensure the swift and successful implementation of Government policy.

Accelerated implementation of the indigenisation law has been stymied by funding gaps, prompting the need for an Empowerment Levy to finance empowerment initiatives.

Former Youth, Indigenisation and Economic Empowerment Minister Francis Nhema hinted in June this year that Government was mulling introducing the levy but immediately made a sensational u-turn, claiming his remarks were not policy pronouncements.

At the time, Mr Nhema said: “Really I said it out of humour … there is no levy coming, I have not asked for it yet.”

Government has previously acknowledged that few locals have money to buy shareholding in foreign-owned companies.

But in its report to the Central Committee at the Zanu-PF 6th National People’s Congress, the ruling party’s indigenisation and economic empowerment department rekindled the need for an Empowerment Levy to sustain the National Indigenisation and Economic Empowerment Fund.

The department suggested implementation of a raft of measures – covering the legal framework, capacitation of the National Indigenisation and Economic Empowerment Board and capitalisation of NIEEF – to enhance empowerment policies.

Under the legal framework, the department said the law requires “further and constant reform to suit the policy needs and imperatives” of the programme given “deficiencies in the current law”.

The Parliamentary Legal Committee, through an adverse report on General Notice 114 of 2011, charged the notice violates the declaration of rights as enshrined in the country’s Constitution, particularly Section 16 wherein is alleging that the minister, by designating entities and primary state institutions, is compulsorily acquiring private property.

The PLC also took issue with Section 21 of the law alleging that the minister, by designation of entities, had imposed partners on foreign investors thereby infringing on their right to freedom of association.

The Central Committee report called for gazetting “of the Indigenisation and Empowerment Levy” explaining that the Indigenisation and Economic Empowerment Act provides for such a levy to be paid by all businesses and companies operating in the country”. The levy is important for the successful implementation of indigenisation and empowerment (regulations), and will provide necessary funds to support start-up businesses by indigenous persons, acquisitions as well as financing income generating projects,” reads the report in part.

Since the gazetting of the Indigenisation and Economic Empowerment (General) Regulations in March 2010, the parent ministry has received 1 480 applications for approval of indigenisation implementation plans.

So far, at least 802 applications have been processed and approved as compliant with the regulations and applicable notices.

In the reserved sectors 1 750 applications were also received from October 2013 to September 30, 2014 and 884 companies were given certificates enabling them to operate in the said sectors.

But over the years NIEEF has been allocated resources insufficient to meet operational expenses and requirements.

There is practically no budget provision for NIEEF to carry out its core business of financing indigenisation and empowerment transactions such as business start-ups, expansion and rehabilitation, as well as warehousing of shares, which are critical for growing the economy. NIEEF was allocated US$2,2 million by Finance Minister Patrick Chinamasa in the 2014 spending plan against a budget request of US$10 million.

It is understood that out of the 2013 allocation, only US$637 989 was released by Treasury resulting in NIEEF accumulating debts of over US$1 million which have been carried over to this financial year.

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