News analysis and views -- economist.com
More disastrous government initiatives in Zimbabwe The Zimbabwean government has published legislation that will force foreign-owned mining companies to transfer majority shareholdings to local interests. The draft law, which is likely to be submitted to parliament before the end of the year, states that miners will be expected to give 25% of their shares to the government for free, while a further 26% will be paid for with future earnings. In one sense this doesn't come as a huge surprise: the mines minister announced almost exactly the same plan in early March. This prompted a furious reaction from mining houses, which insisted that they were prepared to sell--not give--up to 30% of their shares to local interests, but that they were not wiling to cede effective majority (and management) control. Given that mining is one of the country's few remaining foreign-currency earners, industry sources pushed the line that Robert Mugabe's administration was having second thoughts after being told just what nationalisation would mean for the industry. Even at the time, however, government sources denied this, saying merely that the precise formula of nationalisation had yet to be finalised. Miners are not the only companies facing further operational difficulties, since retailers have been given until November 22nd to sell imported stock at existing prices; from henceforth, however, they must set their prices based on the government's official exchange rate, of Z$30,000:US$1, rather than the parallel-market rate, which is currently around Z$1m:US$1. According to the National Incomes and Pricing Commission, which issued the order, retailers must show what price they paid in foreign currency for imported goods; this will be converted at the official exchange rate and a 50% mark-up will be added to arrive at the retail price. Although no new legislation has been passed or new government order gazetted, officials warn that any retailers found breaking the order face punishment, and as nearly 30,000 retailers have been arrested and fined for breaking price controls imposed in June, businesspeople have little doubt that the threat will be carried out. ...