ZIMBABWE clamped down with the enforcement of its controversial indigenization law–requiring foreign companies with assets of more than $500,000 to transfer or sell 51 percent stake to indigenous Zimbabweans this month.
The deadline of April 1 had been set earlier in March in accordance with the controversial 2008 indigenization law requiring foreign companies to submit plans for such indigenization or face the risk of closure.
Zimbabwe is serious: According to the minister of youth and indigenization and economic empowerment, Patrick Zhuwao, the government is determined to implement the policy because it was elected in 2013 through “promised indigenisation and empowerment”.
As Zimbabwe’s largest source of foreign investment, Chinese investors are inevitably impacted. While China has generally tried to dispel the image of the indigenization being targeted at China, it has clearly voiced its displeasure, especially in the case of the diamond mining industry. Furthermore, dissatisfaction is rampant among many in China, who question the solidity and future of the special friendship between the two countries.
According to Chinese statistics, China has been the largest foreign investor in Zimbabwe for years, with total FDI of more than $600 million in 2013. Among all African destinations for Chinese investment, Zimbabwe has ranked top three in the past three years.
According to official Chinese media, currently there are more than 10,000 Chinese nationals living and working in Zimbabwe. Many Chinese companies in Zimbabwe are actively engaged in contractor services, including telecommunications, irrigation, power, and construction.
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