Signs that Zimbabwe is relaxing its black economic empowerment drive could see a rise in British investments in the southern African nation, according to an embassy report, following an exodus of investors in recent years.
Known as “indigenisation” in Zimbabwe, the empowerment policy aims to redress colonial-era imbalances by forcing foreign companies to sell majority domestic stakes to local black investors.
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“Despite continued mixed signals, there are encouraging signs that the government is softening its stance on indigenisation and developing more investor friendly policies,” the British embassy report said on Tuesday.
“The policy shift offers UK companies an opportunity to increase trade and investment.”
Big British companies left Zimbabwe during the 2000-2008 period at the height of an economic crisis, also discouraged by Britain’s frosty ties with its former colony after President Robert Mugabe’s seizure of commercial farms belonging to white farmers.
Relations also soured over charges that Mugabe’s ruling ZANU-PF party has rigged votes and used violence to cling to power.
Mugabe, Africa’s oldest leader who has held power since independence in 1980, says London treats Zimbabwe as its colony and seeks to maintain influence in the mineral-rich country.
London has led Western countries in withholding financial aid to Harare in protest over Mugabe’s policies. This has hit an economy that analysts say will stagnate or fall into recession this year.
The embassy report did not elaborate or provide specific examples of the policy shift, but said Zimbabwe has huge economic potential because of mineral deposits and its central location in southern Africa.
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Earlier this year, Zimbabwe’s government amended its Indigenisation and Economic Empowerment Act to allow foreign-owned companies to negotiate with individual ministries on how they planned to comply with the law.
Catriona Laing, British ambassador in Harare, said Zimbabwe’s 14 billion US dollars economy would be triple its current size if the southern African nation had kept pace with average African growth since 1998.
Britain has since last year sent two official business delegations to Zimbabwe, the first in nearly 20 years, as the two countries seek to thaw ties.