Zimbabwe tables bill to localise company ownership

HARARE, June 25 (Reuters) President Robert Mugabe's government is seeking to transfer majority control of ''public companies and any other business'' to black Zimbabweans, a move critics say could deepen the country's economic crisis.

A bill the government made public today will be presented to parliament proposing indigenous black Zimbabweans will get at least a 51 per cent share of those companies.

Although it is not clear how private companies will be affected, analysts say the move is likely to further damage investor confidence in Zimbabwe, which is suffering from the world's highest inflation rate and severe food, fuel and foreign currency shortages.

Parliament is expected to approve the Indigenisation and Economic Empowerment Bill, which stipulates that no company restructuring, merger or acquisition would be approved unless 51 percent of the business goes to indigenous Zimbabweans.

''For a start, it's not very clear how they are going to implement this, but going by their record it could be another chaotic and disastrous exercise,'' leading Zimbabwean economic consultant John Robertson told Reuters.

''Those (companies) already here are likely to hold back on any expansion programmes, while possible new foreign investors are likely to also hold back to watch how this is going to work.'' The empowerment bill defines indigenous Zimbabweans as any person who was disadvantaged by unfair discrimination on the grounds of race before independence in 1980.

MINING SECTOR Earlier this month, Mines Minister Amos Midzi said Zimbabwe is to take control of strategic resource sectors such as uranium, but in other sectors local businesses will take majority stakes.

He said special consideration may be given to companies already operating in the country, such as international miners Impala Platinum and Rio Tinto.

Political analysts said the proposed bill would give Mugabe an opportunity to enrich his supporters and consolidate his ranks ahead of general elections next year.

Although the likely exemption of major mining companies from the programme will leave only a few big foreign firms in danger, Mugabe could still use the programme as a political weapon, they said.

''I think it's fair to expect that the first targets here will be those companies that the government has been accusing of sabotaging the economy, of raising prices unreasonably, of cutting production,'' said Eldred Masunungure, a political science professor at the University of Zimbabwe.

The southern African country is in the grips of an economic recession -- now in its eighth year -- and is struggling to feed itself, while four in five Zimbabweans are out of work.

Critics blame the crisis on Mugabe's economic policies, such as the seizing of white-owned farms to resettle blacks, which they say devastated the crucial agriculture sector and triggered the recession.

The breakdown of the economy has heightened political tensions.

Mugabe has responded by cracking down on the opposition, drawing fresh international attention to his controversial rule.

But the 83-year-old leader denies his policies are at fault and instead points the finger at Western sanctions.

Zimbabwe yesterday described as ''malicious'' comments by the US ambassador to Harare who predicted raging inflation would force Mugabe from office before the end of the year.

The cost of some basic commodities have risen three-fold in the past week, with the government suggesting the increases were part of a campaign to oust Mugabe.

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