10.03.2008 Zimbabwe

Mugabe approves new ownership law

Mugabe approves new ownership law
10.03.2008 LISTEN

Zimbabwe's President Robert Mugabe has approved legislation giving local owners the right to take a majority share of foreign companies.

Mr Mugabe's formal approval of the Indigenisation and Economic Empowerment Bill comes three weeks ahead of his country's presidential elections.

Under the legislation, every company must have at least 51% of their shares owned by black Zimbabweans.

If not, the government will block new investment, mergers or restructuring.

The new law means some of the country's biggest businesses - such as the mining giant, Rio Tinto, and Barclays Bank - will have to find local partners.

Historic empowerment?

For Mr Mugabe and his ruling Zanu-PF party, the indigenisation bill is a natural stage in establishing the country's economic independence, says the BBC's Peter Greste in neighbouring South Africa.

The bill will give black Zimbabweans the power to share in the wealth of their country, according to Sikhanyiso Ndlovu, Mr Mugabe's information minister.

"It is an historic economic empowerment bill that has been signed," Mr Ndlovu told the BBC.

"It is the first of its kind in the whole of Africa."
But to the opposition Movement for Democratic Change party, the law is a cynical attempt to buy public support ahead of elections scheduled for 29 March.

And rather than helping the economy, independent economists suggest the new law is likely to cripple foreign investment badly need to help stem the country's inflation, which is now officially running at more than 100,000%.

The forthcoming elections are the strongest electoral challenge of Mr Mugabe's 28-year rule, with former Finance Minister Simba Makoni and the long-term opposition leader, Morgan Tsvangirai, both running against him.