Foreign banks can go: Mangwana
Source: The Financial Gazette
Date: 27 September 2007
Author: Shame Makoshori,
A cabinet minister this week said financial institutions unwilling to comply with a proposed indigenisation law could leave the country, charging that government would not back down from its plans to force foreign-owned companies to cede control to locals. Mangwana, who was responding to concerns raised by two of the country’s major foreign-owned banks over the indigenisation law being debated in Parliament, said banks unwilling to comply with a government requirement to give up 51 percent shareholding to locals "can simply go". He said this when he appeared before parliamentary portfolio committees last week. In the emotionally charged half-hour session to discuss the proposed Indigenisation and Empowerment Bill, Mangwana labelled local managers in the financial institutions "neo-liberals" who take instructions from London. He said they would never be given space to reverse what he termed "a political decision".
"We were colonised by force," Mangwana told the legislators. "But we are trying to correct that, we cannot expect them to smile. If Standard Chartered Bank feel they cannot continue (operations in Zimbabwe) they can simply go and CBZ can take over. Metropolitan Bank can take over, and FBC can do the same. They frighten you that there will be capital flight but they are neo-liberals. Blacks run these banks but decisions are made in London. They want to create white islands in a liberated Zimbabwe. We are not going to take that," Mangwana said. "If you look at the lines of credit they bring, they are very little. Zimbabwe generates $3 billion in foreign currency per year. But their contribution is only US$70 million. We cannot be held at ransom because of US$70 million. The revolutionary stamina in me says no. That is my answer," Mangwana said.
He charged that government was in fact eyeing complete takeover of all foreign-owned companies. "The 51 percent is only the minimum; we even want 90 percent. When you are carrying out a revolution you do not do it in half steps. Zimbabwe cannot be half independent. It is a question of political and economic empowerment and once that is done, then the revolution is complete. SADC will learn from Zimbabwe (as happened) in the land reform," he said. In their presentations, representatives of Standard Chartered and Stanbic last week proposed a revision of the minimum threshold to between 30 percent 49 percent. The two banks warned that under its present state, the proposed empowerment legislation would make the country less attractive to foreign investors and could scuttle present support relationships arising from their foreign ownerships.
But Mangwana said government would be resolute and undeterred, warning that the plan was to reverse "a situation in which 80 percent of the economy was in the hands of foreigners". He said that 98 percent ownership of the shipping business in Lake Kariba was under whites. "We chased them from the farms and they went to the harbours," the minister said. "The same is the situation in the fisheries business. Now, you have your Old Mutuals traversing across the entire economy buying shares, not small shares but controlling stakes." He said government would respect present agreements during the transformation process, adding a step-by-step approach will be taken for existing companies and different timeframes will be given. "But we have said let’s have a law to say that at some stage you will have to indigenise."