The Sunday Mail
Kuda Bwititi Chief reporter
Consultations on the rate of the Empowerment Levy, a fee charged foreign companies that are yet to meet indigenisation thresholds, start this week as Government steps up measures to ensure compliance with the law within the first quarter of 2016.The Sunday Mail established that Government last week directed line ministries to work with companies under their purview to ensure they comply with indigenisation regulations.
Finance and Economic Development Minister Patrick Chinamasa and his Indigenisation and Economic Empowerment counterpart Patrick Zhuwawo have jointly announced an “improved provision of the Act” to ensure implementation clarity.
The indigenisation law stipulates that the 51 percent shareholding can be submitted under community share ownership schemes, employee shares, empowerment trust or to the National Indegnisation and Economic Empowerment Fund.
Widely regarded as flexible, the new framework allows companies to negotiate with Government in cases where they are not able to meet the 51-49 percent threshold – although levies would be paid until the indigenisation benchmark has been met.
Other investor friendly provisions include offering empowerment credits and rebates to investors.
The framework also requires that all Government departments, statutory bodies and local authorities buy at least 50 percent of their goods from local businesses.
The Indigenisation and Economic Empowerment Act was first passed in 2007 and Government has been fine-tuning it.The most recent provisions outlined last week tie in with plans to increase FDI in line with the goals of the Zimbabwe Agenda for Sustainable Socio Economic Transformation and the 10-Point Economic Plan.
A Statutory Instrument stipulating the quantum of rates for the Empowerment Levy and empowerment credits will be gazetted to further bolster the indigenisation framework.
Minister Zhuwawo told The Sunday Mail that the National Indigenisation and Economic Empowerment Board would step up its work to encourage compliance.
“What we are doing as a ministry is to intensify our work in terms of putting in place the right mechanisms to ensure that companies comply with the March 31 deadline. So far I have been in touch with line ministries to impress upon the need to engage with companies that fall under their ambit to get them to comply,” he said.
Minister Zhuwawo said the issue of compliance was set to appear on Cabinet agenda in the next few weeks to ensure frequent appraisals ahead of the March 31 deadline.
He said consultations with the private sector were also set to begin in earnest this week, with his ministry increasing awareness on the various avenues that are available in terms of compliance.
“I have been invited to a breakfast meeting on January 14 by a private company. This will be the starting point of the sort of platform that we will continue to have as a ministry to discuss the various pathways to compliance,” he said.
Minister Zhuwawo encouraged companies to comply with the law, saying the rate of the empowerment levy will be determined by how firms are agreeable to the indigenisation framework.
“Companies should understand that the level of the levy will be determined by how the companies react before March 31. If companies are to be stubborn, I have a feeling that a high empowerment levy will be imposed and vice versa,” he said.
NIEEB chief executive Mr Wilson Gwatiringa said the board would start sectoral consultations next week.
“We are going to carry out consultations with all the companies on a sector by sector basis.
This process will help us determine the indicators for the empowerment credits so that once they are set, they will be credible and they will be well understood by the stakeholders and companies will be able to calculate and know how they will be paying in terms of the indigenisation plans that they put forward,” he said.
Mr Gwatiringa said the consultations would pave way for crafting of a Statutory Instrument on the Empowerment Levy and credits.
According to new framework, a maximum possible 100 percent compliance means a business has effectively complied with the Indigenisation and Economic Empowerment Act and does not need to pay the levy.
The framework also stipulates that in the resources sector, Government-designated entities shall continue acquiring 51 percent equity in businesses exploiting natural resources at no monetary consideration serve for the contribution of the resource being exploited.
In the non-resources sector, General Notices (459 of 2011 and 280 of 2012), developed by sector-specific committees, will continue being operational.
No new non-indigenous business will be allowed to invest in the reserved sector except “under special cases as determined by line ministries and approved by Cabinet”.
1 600 firms submit compliance plans
Chief Reporter
More than 1 600 companies submitted plans to comply with the Indigenisation and Economic Empowerment Act by the end of 2015, the National Indigenisation and Economic Empowerment Board has said.
Among major companies that submitted their plans were British America Tobacco, Pan African Mining, Olivine Industries, Blue Ribbon Foods, MinChip Investments, Anchor Yeast, Africa Sun, and Cochrane Engineering among others.
Alos on the are severa joint ventures between Zimbabwean and Chinese businesses.
In an interview last week, NIEEB head of compliance Mrs Theresa Chifamba said while some major companies were yet to submit their plans, the board expected them to do so following proclamation of a new indigenisation framework stipulating that all firms should hand-in their proposals by March 31.
“There are a number of big companies which are yet to submit their plans but I can say that save for a few, most of those that have not submitted have already given their commitment that they will be able to comply.
“Our expectations are that now that Government has given the deadline, the companies will not dither anymore but will come up with their plans to comply,” she said.
At the end of 2014, at least 1 300 had submitted their plans while 1100 had done so in 2013.
