Wednesday, June 4, 2014

China: Exempt from Zimbabwe's Indigenization Policy?

In southern Africa, many people believe that Chinese companies are exempt from the indigenization policy in Zimbabwe -- a requirement that firms submit plans as to how they will achieve 51 percent Zimbabwean ownership over a set period. I don't think Chinese firms have a blanket exemption. True,  I have read that the tobacco buyer Tian Ze -- which has been working with indigenous Zimbabwean tobacco farmers in a contract farming arrangement, supplying inputs and credit, and purchasing their crop -- was given an exemption. There may be some other Chinese companies that have negotiated exceptions just as some other foreign firms have been trying to do, but despite the oft-stated "Chinese are exempt" belief, the evidence suggests that Chinese firm have no blanket exemption. 
In fact, a Chinese language website, "Zimbabwe Forum for Chinese," reprints several notices from the Chinese embassy, reminding Chinese readers about the indigenization policy, which they have translated into Chinese. The policy covers a number of economic sectors. To summarize one of the notices, which refers only to a set of 14 sectors reserved for Zimbabwe citizens: the embassy states:
"Zimbabwe's Indigenization and Economic Empowerment Act "(2010 Amendment) and Localization and Economic Empowerment Ministry No. 66 File 2013" provide that commercial activities in the reserved sectors must obtain localization certificates before January 1, 2014. Businesses are required to submit proof of localization options or plans. Failure to comply will be punishable by a fine, 3 to 4 months imprisonment, or both. The Chinese Embassy in Zimbabwe reminds those Chinese citizens engaged in reserved sectors, including retail and wholesale, to fully understand and comply with the relevant laws and regulations in time, in order to avoid unnecessary trouble and losses. The 14 sectors include: 1. Agriculture: food and cash crops of primary products; 2. Transportation: passenger buses, taxis and car rental services; 3. retail and wholesale; 4. barber shop, a hairdresser and a beauty salon; 5. Employment Agencies; 6. Real estate agent; 7. valet service; 8. grain milling; 9. bakery; 10. tobacco grading and packaging; 11. tobacco processing; 12. advertising agency; 13. milk processing; 14. The local art and handmade products marketing and distribution.
Comments on the website reveal a lot of confusion about the policy and how it will be implemented, but the message from the embassy is consistent: obtain your localization certificate in time or risk fines and imprisonment.

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