The impact of the nationalisation threat on Zimbabwe’s economy

Abstract

The purpose of this study was to examine the likely impact that the proposed agenda of nationalisation of foreign-owned business in Zimbabwe, by implementing the Indigenisation and Economic Empowerment Act, would have on the economy in the country. Nationalisation of foreign-owned businesses comes on the back of the disastrous Fast-Track Land Reform Programme which had sought to give land to the black majority in the country. The results of the study show that foreign investors were shaken by the announcement of nationalisation of all foreign-owned firms, including banks and mines. Most foreign investors adopted a “wait and see” attitude since the nature of their investment was mainly resource-seeking FDI, and they could therefore not remove their fixed, immovable assets from the country. With the economy still trying to recover from earlier declines in economic activity, it is recommended that the Government revises the Indigenisation Act in order to ensure FDI inflows continue to be attracted into the country, in a bid to stabilise and further grow the economy.