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What Is Indigenisation?

What is Indigenisation?

It is a deliberate involvement of indigenous Zimbabweans in the economic activities of the country to which prior to18 April 1980, they had no access, so as to ensure equitable ownership of the nation’s resource.

 

Who are the beneficaries from the indigenisation process?

Indigenisation is a national approach which seeks to benefit all indigenous citizens as outlined above. The following measures have been instituted to ensure broad based participation by a broad spectrum of the indigenous Zimbabwean population:

 

Management and Employee Share Ownership Trusts
Employees and Management are key stakeholders to any business. Consequently, Government policy is that they should acquire some shareholding as part of the 51% indigenisation requirement. They are immense benefits to the business, staff and the nation in following such an arrangement.

In terms of the law, companies shall allocate a maximum of 28% towards the Employee Share Ownership Scheme out of which managerial employees shall not benefit to an extent exceeding five per centum of the shares of the Employee Share Ownership Scheme.

 

A qualifying Employee Share Ownership Scheme or trust shall be constituted by a Deed of Trust registered with the Deeds Office and shall specify the percentage of shares to be held by or on behalf of the employees. An owner of a business or employer wishing to use the qualifying scheme or trust for the purpose of this section shall submit to the Minister Form IDG 04 together with a copy of the Deed of Trust of the qualifying scheme or trust.

 

Community Share Ownership Trusts

Community Share Ownership Schemes or Trusts (CSOS/T) are a vehicle for participation in shareholding in various businesses by our communities. The proceeds from such participation must be properly accounted for and used in projects which benefit the communities as outlined below. The accounts of the Trust shall be audited on an annual basis.

 

Community Share Ownership Schemes or Trusts shall be established by businesses involved in the commercial exploitation of natural resources, including minerals since the relevant communities have the natural right to benefit from their God-given resources.

 

CSOS/T would be taken into account when assessing the extent to which a business has achieved the minimum indigenisation and empowerment quota of 51%. 10% shareholding in qualifying businesses shall be reserved for the Community Share Ownership Schemes or Trusts. The CSOS/T shall have a Deed of Trust registered with the Deeds Office.

 

There shall be between 5 to 11 members of the Community Share Ownership Scheme/Trust depending on the size of the defined community in relation to the business concerned. The Chief shall be the chairperson of the Community Share Ownership Scheme/Trust. The Chairperson of the Rural District Council shall be a trustee. The Chief Executive Officer of Rural District Council shall be the Secretary of the Community Share Ownership Scheme/Trust. Money accruing to the Trust from such shareholding in a business shall be used for the provision of social and economic infrastructure in line with the priorities of the communities concerned.

 

Some of the projects to be undertaken through the proceeds of the trust are:

  • The provision, operation and maintenance of schools and other educational institutions and facilities and amenities connected educational scholarships, hospitals, clinics and dispensaries
  • The provision and maintenance of dipping tanks
  • The provision, development and maintenance of roads
  • The provision, development and maintenance of water works and water sanitation works
  • Gully reclamation and other works related to soil conservation and prevention of soil erosion, and the conservation and prevention of environmental degradation.

 

SPECIFIC IMPLEMENTATION FRAMEWORKS

The following notices have been published for the mining and manufacturing sector:

  1. General Notice 114 of 2011

The General Notice required all non indigenously owned companies to submit Revised Indigenisation Implementation plans. The following are the minimum requirements:

  •  All mining businesses must achieve 51% share disposal to designated entities among which are the Sovereign Wealth Fund, the National Indigenisation and Economic Empowerment Fund, the Zimbabwe Mining Development Corporation, Community Share Ownership Trusts and Employee Share Ownership Trusts.
  • The disposal of shares was to be achieved within six months of gazetting General Notice 114 of 2011.
  • In achieving the disposal of shares, consideration shall be made of the State’s Sovereign Ownership of resources and shall recover value in the form of shareholding.
  • The value of shares to be disposed of to designated entities shall be calculated on the basis of a valuation agreed to between the Minister and the non indigenous mining business concerned, which shall take into account the State Sovereign Ownership of the mineral(s) exploited or proposed to be exploited.  

 

           2. General Notice 459 of 2011

The notice requires the following:

  • All businesses in the manufacturing sector with a net asset valueat least $100 000 shall comply with the indigenisation and Economic Empowerment Legislation.
  • There shall be a lesser share of 26% indigenous shareholding.
  • Businesses have to comply with the 51% indigenous shareholding requirement over a period of four years from the date of publication of the General Notice 459 of 2011.

The following are the annual indigenisation targets:

  • Year 1 :26%indigenous shareholding
  • Year 2 :36% indigenous shareholding
  • Year 3 :46% indigenous shareholding
  • Year 4 :51% indigenous shareholding

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