The Zimbabwean government has re-emphasised its commitment to the Indigenisation and Economic Empowerment Act, announcing a renewed focus on reserving twelve key business sectors exclusively for Zimbabwean citizens. This move, detailed by the Ministry of Finance and Economic Development and highlighted by Secretary for Information, Publicity, and Broadcasting Services Nick Mangwana on X (formerly Twitter), has sparked a lively debate across the nation.
Nick Mangwana revealed the list and stated that the government would enforce the reserved sector provisions of the Indigenisation Law. The sectors include:
- Transportation: Passenger buses, taxis, and car hire services
- Retail and wholesale trade
- Barber shops, hairdressing, and beauty salons
- Employment agencies
- Estate agencies
- Valet services
- Grain milling
- Bakeries
- Tobacco grading and packaging
- Advertising agencies
- Provision of local arts and crafts, marketing, and distribution
- Artisanal mining
Mixed Reactions from the Public
The announcement has ignited a heated debate on social media, with many Zimbabweans expressing both support and scepticism. Some praised the government for prioritising local businesses, while others pointed out that foreigners are already operating in some of these sectors.
“This is a good move to protect our local entrepreneurs, but how will the government enforce it? Foreigners are already running bakeries and retail shops in most towns,” one user commented.
Others suggested additional industries that should be reserved for locals, such as agriculture and manufacturing.
Amendments to the Indigenisation Act
The reserved sectors are part of amendments to Zimbabwe’s Indigenisation and Economic Empowerment Act, Chapter 14:33, which were gazetted on 14 March 2018. The changes, first announced in the 2018 Budget, marked a significant shift from the previous requirement that at least 51% of all businesses be owned by indigenous Zimbabweans.
Under the amended Act, the 51% indigenous ownership rule now applies only to companies involved in the diamond and platinum extractive industries. For all other sectors, foreign investors are free to operate without restrictions, except for the 12 reserved sectors.
In the diamond and platinum industries, at least 51% of the shares of designated extractive businesses must be owned by designated entities such as the Zimbabwe Mining Development Corporation, the Zimbabwe Consolidated Diamond Company, or the National Indigenisation and Economic Empowerment Fund. These entities may include community or employee share ownership schemes.
Transitional Arrangements for Foreign Businesses
Foreign-owned businesses already operating in the reserved sectors before 1 January 2018 were allowed to continue if they registered with the Zimbabwe Revenue Authority and the National Indigenisation and Economic Empowerment Unit by 1 July 2018. They were also required to open local bank accounts.
New foreign entrants seeking to operate in the reserved sectors may apply to the Ministry of Finance for permission, provided they can demonstrate significant employment creation, skills transfer, and the establishment of sustainable value chains.
Historical Context of the Reserved Sectors
The concept of reserved sectors is not new. In 2011, Zanu PF launched a campaign to ensure that foreign nationals did not operate in economic sub-sectors reserved for Zimbabwean citizens. Dr Mike Bimha, then Zanu PF secretary for Indigenisation and Economic Empowerment, emphasised that these sectors should benefit and be owned exclusively by Zimbabweans.
“The reserved sectors are only for Zimbabwean citizens and not for foreigners. Local authorities must stop issuing licences to foreigners,” Dr Bimha said at the time.
He also stressed the need for robust systems to police compliance, urging local authorities to enforce the policy strictly.
President Mnangagwa’s Vision
The amendments to the Indigenisation Act align with President Emmerson Mnangagwa’s promise to make Zimbabwe “open for business.” In December 2017, he pledged to significantly amend the Act by the first quarter of 2018, a promise he fulfilled.
The changes reflect the government’s commitment to balancing the protection of local businesses with the need to attract foreign investment. By reserving certain sectors for Zimbabweans while opening others to foreign investors, the government aims to stimulate economic growth and create opportunities for its citizens.
Challenges and Opportunities
While the reserved sectors policy is well-intentioned, its success will depend on effective enforcement. Many Zimbabweans have expressed concerns about the government’s ability to monitor and regulate these industries, especially given the prevalence of foreign-owned businesses in some of the reserved sectors.
Additionally, the policy raises questions about the capacity of local entrepreneurs to fully utilise the opportunities presented. Some critics argue that without adequate support, such as access to capital and training, local businesses may struggle to compete and thrive.