ZIMBABWE SHELVES COMPANY OWNERSHIP LAW

A controversial Zimbabwean law forcing companies to be majority-owned by so-called 'indigenous' people has been shelved six weeks after it began.

The law, which came into force on March 1, affected firms owned by 'non-indigenous' people valued at more than $500,000.

British Broadcasting Corporation reported on Wednesday, that this effectively ruled out ownership by white Zimbabweans or foreign firms.

The government said it was now 'null and void' pending further consultations.

The country's stock market has fallen by 10 per cent since the law's introduction, with mining shares losing 20 per cent.

Analysts said the law had served to deter much-needed foreign investment in the country.

'A lot of concerns have been raised by a number of companies in the mining, manufacturing and tourism sector that the regulations would scare away potential investors,' Zimbabwean journalist Brian Hungwe told the BBC.

Even so, he said the move to repeal the law came as a 'huge surprise' after President Robert Mugabe had recently defended the law and said it would not be reversed.

Prime Minister Morgan Tsvangirai has repeatedly criticised the law.

Under the so-called indigenisation law, companies owned by non-indigenous people were given five years to sell a 51 per cent stake to indigenous people. They were given 45 days to submit proposals on how this would be done.

An 'indigenous Zimbabwean' had been defined as 'any person who before the 18 April 1980' – the official founding date of Zimbabwe – 'was disadvantaged by unfair discrimination on the grounds of his or her race'.

The law was seen as an extension of the government's policy of seizing white-owned farms and giving them to locals, which started more than 10 years ago.

That programme is considered by many to have failed, as many seized farms have remained dormant.

As a result, Zimbabwe – once known as the bread basket of Africa – has become a net importer of food.