HARARE – Zimbabwe will allow foreigners to buy stakes of up to 49 percent in companies listed on its stock exchange as it tries to boost investment and revive its struggling economy, central bank governor John Mangudya said on Thursday.
In a speech, he also said all investments by Zimbabweans abroad would require central bank approval with immediate effect and that banks would be penalised if they allowed external transfers not approved by the central bank.
He also urged the creation of an Economic Crimes Court.
“We have … increased the threshold of foreign investors on the stock exchange from 40 percent to 49 percent in line with the indigenisation and economic empowerment policy,” Mangudya said in a speech.
The central bank chief said Zimbabwean companies and individuals had illegally transferred $1.884 billion in 2015, blaming this on lax foreign exchange controls since the country abandoned its currency in 2009 in favour of foreign currencies.
The money was being transferred through non-remittance of export earnings, unapproved foreign investments, tax evasion and smuggling, he added.
“This country needs to plug the leakages of foreign exchange for the economy to undergo durable and robust transformation,” Mangudya said.
The Southern African nation is still struggling to overcome a steep 1999-2008 recession that saw its economy contract by nearly 50 percent, with problems exacerbated by a devastating drought and plunging prices for the commodities it exports.
The former British colony finances its entire budget from taxes after international financial institutions stopped lending in 2000 after Zimbabwe defaulted on its debt.
On Thursday, the central bank chief blamed low industrial capacity and tax revenues as well as a liquidity crunch for sluggish growth and said suppressed demand is feeding deflation.
Mangudya said low commodity prices had hit exports, which fell 12.2 percent to $2.5 billion between January and November last year. Imports also declined 5.8 percent to $5.9 billion during the same period.
On Wednesday, the World Bank forecast Zimbabwe’s economy will grow by 1.5 percent in 2016, less than the government projects, and said consumer prices will remain deflationary due to global and local constraints on its recovery.