Arcadia Foundation

It has been no secret that amidst political turmoil, a devastating cholera epidemic and continued hyperinflation Zimbabwe has been seeking a lift of heavy economic sanctions and indeed an increase in foreign investment. Today’s actions further the will of President Robert Mugabe and effectively halt any further investment.

Today in Harare, a law was passed that compels all businesses with assets worth more than $500,000 to be 51 percent black-owned within five years, according to a copy of the law distributed by Harare-based Veritas Trust.

The law was published in the Government Gazette, a public document. It comes into effect March 1 and stipulates prison sentences of up to five years for non-compliance. Veritas is a Harare-based non-governmental organization that monitors the passage of laws through parliament and their publication.

The new law may affect numerous companies doing business in the nation, including Anglo Platinum Ltd., Impala Platinum Holdings Ltd. and Aquarius Platinum Ltd., three of the world’s four biggest producers of the metal, which all own mines in Zimbabwe. Old Mutual Plc, Africa’s biggest insurer, owns properties and a life-insurance operation in the country.

“The news is very grim,” John Robertson, a Harare-based economist, said in a phone interview today from the capital. “It will effectively freeze any further investment in Zimbabwe, ironically just as the country is calling for investment.”

Unbeknownst to many, Zimbabwe has the world’s second-largest reserves of platinum and chrome, after South Africa, along with deposits of gold, coal, diamonds and nickel. The economy is recovering from a decade of recession that followed Zimbabwean President Robert Mugabe’s seizure of white-owned commercial farms to redistribute to black subsistence farmers deprived of land during colonial rule. The program slashed exports.

We will document the inevitable fallout further in a new series we will be publishing on our site, “This Week in Erratic Authoritarianism“.

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