Zimbabwe forces foreign firms to give up majority stake.
On the 1ste of March a new law comes into effect in Zimbabwe. This law forces foreign-owned companies to sell upon 51% of their stake to indigenous people. If they don’t do it, they may be arrested.
John Robertson told that it was a very bad idea and it makes Zimbabwe less attractive to foreign investors. These investors are much needed in the country that once the bread basket of Africa was called. Today the country suffers under hyper inflation and generally famine. Robertson continued that the law only benefits those who were pointed by the Zimbabwean government.
Also The Zimbabwe Congress of Trade Unions has warned that the new law could have negative consequences. Although the law is good it will probably led to a new minority of blacks who will replace the minority of whites.
According to my opinion this law will only influence the trust of investors negatively. By forcing them to sell upon 51% of their stake the lose control over the investment. They should better force the companies to sell their investment slowly so that they can learn the people of Zimbabwe to do business. On the other hand the people of Zimbabwe aren’t ready to lead a company immediately. The government should better take action to educate them by building schools. These schools will teach them how to lead a company.
Just like The Zimbabwean Congress of Trade Unions told the government creates a new minority of blacks who surely use their power over the companies. I think they will become corrupt and mistreating the people they control.
When you watch the situation as an investor I should definitely not invest in a country where the government decides what a company owner does. They invest their money in a company so it’s logical that they keep control over the investment. On the other hand laws are needed to keep control over the companies but forcing them to sell upon 51% is too much.
Source: http://news.bbc.co.uk/2/hi/business/8542966.stm
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Kenny
BeantwoordenVerwijderenI fully agree with your point of view, a country as Zimbabwe doesn’t need to say with the same investors who they must sell their shares to. It’s better for them to learn from a good investor than avoid investors in their country. The country hasn’t got any good education system so they can’t create good leaders. They definitely need to make a better education system.
Kenny,
BeantwoordenVerwijderenI think you're partially right.
Zimbabwe is a third world country that needs foreign support, which makes it a good thing that there are a lot of foreign investors who has settled over there in the course of time.
On the other side, a lot of people think that multinationals and other big companies are only negative for a poor country's welfare. The money goes straight to an often corrupt governement, instead of going to the local people. Therefore, the new law can be considered to be a good thing, although you're certainly right when you say that Zimbabwe will lose its attractiveness by this rule.
So if you ask me, it's a good thing that measures have been taken to look after the local people, but this measure may not be the one we're looking for.