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Zimbabwe government voids law restricting foreign ownership of companies

By Bernard Hibbitts (editor) and University of Pittsburgh School of Law students.

[JURIST] Zimbabwe's government on Wednesday declared void a law mandating that indigenous people have majority ownership in all businesses valued at over $500,000. The law took effect last month, but the country's stock market has since fallen 10 percent, causing concern that the law would drive away potential investors. The majority of firms within Zimbabwe that meet the $500,000 threshold are banks and mining companies, and shares in mining companies have fallen 20 percent since the law's enactment. The decrease in stock value is another obstacle for a country in dire economic straits, including an inflation rate that has been as high as 231,000,000 percent. A spokesperson for Prime Minister Morgan Tsvangirai indicated that the law, while void, will be reexamined as the government looks for the best way forward. Critics of the law have compared it to the land reform program passed under the Robert Mugabe administration in 2000, which resulted in the government seizure of farm land from white farmers. In March, white farmers displaced by Zimbabwe's land reform program announced an intention to seize Zimbabwean government property in South Africa pursuant to the judgment of the Southern African Development Community Tribunal (SADC Tribunal). In January, the Zimbabwe High Court ruled that it is not bound by a decision of the SADC Tribunal that ordered the state to halt the land reform program for its discriminatory nature. Mugabe has faced harsh criticism for the program, which has sought to redistribute white-owned land among the nation's indigenous farmers. In February 2006, the Zimbabwean land minister said that there are no white farmers operating legally in Zimbabwe. The government has appropriated some 4,000 farms through the program.

Full post as published by JURIST - The Paper Chase on April 14, 2010 (boomark / email).