September 15, 2008

Zimbabwe: MDC Official Says New Cabinet to Remove Indigenization Legislation

Text of report by South African newspaper Business Report website on 15 September

[Report by Justin Brown: "Zimbabwe Deal To Open Investment Flow"]

Johannesburg -Billions of rands in investment could flow into Zimbabwe's economy, especially in the mineral resources sector, after the political settlement reached last week between Morgan Tsvangirai's Movement for Democratic Change (MDC) and President Robert Mugabe's Zanu-PF.

Eddie Cross, the MDC policy coordinator, said on Friday that the settlement with Zanu-PF would have a "dramatic impact" on Zimbabwe's economy and mining sector.

A new cabinet will be announced this week. Cross indicated that the new cabinet would seek to do away with legislation passed by the previous government, particularly the law that required 51 per cent of all major companies in Zimbabwe be sold to indigenous Zimbabweans.

"We don't intend to maintain that position in any shape or form. That will be subject to immediate review. We plan to revise the policy for mining so as to make it more investor friendly. It is a high priority for us to get all mining projects ... being planned under way."

Although the MDC supported indigenisation in some form, "the kind of indigenisation proposed by the Zimbabwe government is absolutely not acceptable", Cross said. This point had been made by investors, including newcomers China and India.

Cross said: "We will still seek Zimbabwean participation in major parts of the economy, but it is going to be investor friendly."

The MDC was unlikely to prescribe in law a level of indigenisation, he said. Cross predicted massive new investment in the mining industry. "Already investment ... is coming in at about $50 million [R402 million at current exchange rate] a month over the last year. I would expect that to treble almost immediately." He mentioned "numerous major mining projects on the boards".

Sean Gammon, an analyst at Imara Edwards Securities, said: "The key issue will be the ability of the parties to formulate, agree and execute policy, and in this light the practical interaction between Mugabe, as head of cabinet, and Tsvangirai, as head of the council of ministers, is core.

"On paper this looks like a cumbersome structure that could, if the parties so choose, result in stultification of the reforms so clearly needed.

"The agreement does, however, provide an impasse to the political paralysis of the last six months, and a prospect of arrest of the economic decline of the last (or was it a lost?) decade," Gammon said.

He added that the priority would be to address economic problems and to develop the new constitution.

Quoting the Zimbabwean media, Gammon said President Thabo Mbeki had negotiated $1 billion of funding from the African Development Bank for the resuscitation of Zimbabwe's economy.

He said the country could attract up to $6 billion in investment over five years and donor support of between $3 billion and $5 billion.

Dan Simelane, the Africa development manager at African Rainbow Minerals (ARM), said the settlement was a "very positive" development. ARM, which earlier this year registered a company in Zimbabwe, was looking at mining assets there, including platinum group metals, coal, chrome and iron ore.

David Brown, the Impala Platinum chief executive, and Nick Bias, an Aquarius Platinum spokesperson, both said

it was too early to comment on the settlement agreement.

Pranill Ramchander, a spokesperson for Anglo American, declined to comment on the settlement.

Anglo Platinum, of which Anglo owns more than 75 per cent, owns the Unki platinum project in Zimbabwe.

Originally published by Business Report website, Johannesburg, in English 15 Sep 08.

(c) 2008 BBC Monitoring Africa. Provided by ProQuest LLC. All rights Reserved.