Controversial new policies to give black Zimbabweans majority stakes in foreign companies in the country have scared off investors from abroad, stock exchange Chief Executive Emmanuel Munyukwi said on Wednesday.
Munyukwi said in an interview orders from foreign investors had dried up since the end of January when Zimbabwe moved to implement the Indigenisation and Economic Empowerment Act that requires foreign firms sell a 51 percent stake to local blacks.
“Last year our market was being driven by foreigners, upwards of 40 percent were foreigners and net buyers. But from the end of January with the gazetting of the indigenisation regulations, there has been a lot of uncertainty and foreigners have put a hold on their transactions,” Munyukwi said.
A minister said on Tuesday the transfer of control of foreign companies would begin in the key mining sector.
Under the rules, which took effect on March 1, foreign-owned firms must submit plans to show how they will sell 51 percent of their shares to black Zimbabweans within five years.
The Zimbabwe Stock Exchange (ZSE) has 79 listed companies and a market capitalisation of $3.2 billion, down from around $11 billion in 1997-1998.
The exchange re-opened in February 2009 after closing in November 2008 at the height of the country’s hyperinflation which devastated the economy and made its currency worthless.
SOURCED FROM REUTERS