Zimbabwe govt suspends indigenisation rules

Cabinet declares demand for 51% transfer of shares to black citizens null and void

HARARE (Reuters) - Zimbabwe's unity government has suspended and will review rules forcing foreign-owned firms in Zimbabwe to sell a majority stake to local people, a spokesman for Prime Minister Morgan Tsvangirai said on Tuesday.

Under the regulations, which took effect on March 1, foreign-owned companies, including banks and mines, had 45 days to submit proposals on how they planned to sell 51 percent of the shares in local subsidiaries to black Zimbabweans within five years.

The deadline for submitting proposals was Thursday April 15.

"The cabinet has today declared those regulations null and void, and they are being suspended to allow for broad-based consultations on the best way to proceed," spokesman James Maridadi told Reuters.

"Nothing is going to happen until the regulations have been reviewed to get a consensus on the way forward," he said.

There was no immediate comment from President Robert Mugabe's officials, who have been leading the empowerment drive despite warnings that this would discourage foreign investment at a time when the new administration is trying to attract funds to revive an economy that has suffered from a decade of decline.

Mugabe's ZANU-PF government passed an indigenisation and economic empowerment law, aimed at putting foreign-owned firms under local control, in 2007, before he formed a power-sharing administration with rival Morgan Tsvangirai last year.

The government says Zimbabwe needs at least $10 billion to rebuild an economy that shrank by about 40 percent in 10 years and is struggling with dilapidated infrastructure.

Analysts say foreign donors are withholding substantial aid while waiting for democratic reforms and the full implementation of the power-sharing agreement.

Mugabe, Zimbabwe's ruler since independence from Britain in 1980, has previously defended the local ownership laws, while Tsvangirai has opposed them, citing lack of consultation and possible impact on investment.

Key foreign players in Zimbabwe's mining industry include Anglo Platinum and Impala Platinum Holdings, and Rio Tinto has gold and diamond mines in the country.

Britain's Standard Chartered Plc, Barclays Bank Plc and a unit of South Africa's Standard Bank are foreign-owned banks with operations in Zimbabwe.

Click here to sign up to receive our free daily headline email newsletter