New RBZ governor cautions on black empowerment drive

HARARE (Reuters) – Zimbabwe’s new central bank governor said on Wednesday the government should balance its black economic empowerment drive with the need to attract foreign investment to boost the economy.

In his first statement since taking up his post on May 1, John Mangudya conceded that “the Reserve Bank has no tools at the moment to influence the economy directly”.

But his comments came only a few weeks after the finance minister gave banks a temporary exemption from the requirement to be majority-owned by black Zimbabweans.

The International Monetary Fund, local business leaders and investors themselves point to veteran president Robert Mugabe’s black empowerment policy, known locally as “indigenisation”, as an obstacle to foreign investment.

In his statement, Mangudya called for “discipline enough to find an equilibrium position … between the need to promote indigenisation and the need for foreign direct investment and the ability to synchronise the two”.

The government has projected 6.4 percent growth this year, but the World Bank expects 3.0 percent at best from an economy afflicted by lack of capital and investment, while company closures and job losses shrink the tax base.

“The economy is weaker. The lack of liquidity and its limited circulation within the economy remains the biggest immediate challenge that the Zimbabwe economy is facing,” Mangudya said, noting that high consumption and corruption must also be tackled.

More than 70 percent of the national budget goes on salaries, leaving very little for health, education and developing public infrastructure.

The government has already forced foreign mining companies operating in Zimbabwe including Impala Platinum and Anglo American Platinum to cede at least 51 percent of the shares of their local operating units to black Zimbabweans.

Last month, Finance Minister Patrick Chinamasa said foreigners could retain majority stakes in banks for now because locals had no money to buy the shares.

– Reuters

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