Zimbabwe forces majority firm to give up majority stake. (BBC)
The Zimbabwean government has put into effect a law which forces foreign owned firms to give up majority stakes of their businesses to the local people. Overseas firm worth more than $500,000 will have to sell off a 51% stake within five years or risk a jail sentence. The new law known as indigenization law, according to experts is an extension of the law that led to the seizure of white owned farms ten years ago.
According to an economist based in Harare, the government’s policy is a very negative one which will only deter foreign investors from making the country an investment destination. The country’s need of foreign investment will suffer immensely as a result if this law. Zimbabwe has had to suffer because of the seizure of white owned farms ten years ago. The country now exports staple foods because the farms seized have either been left fallow or not producing much. Trade union group of Zimbabwe has also warned that although the principle of the law is good, it will have negative effects on the economy and subsequently the people of Zimbabwe will pay the price.