Are multi-nationals subject to NEEEF?
The Institute for Public Policy Research (IPPR), an organisation that delivers independent, analytical, critical yet constructive research into social, political and economic issues that affect development, this week released its commentary on the New Equitable Economic Empowerment Framework (NEEEF) questioning the potential impact of the proposed law on foreign-owned and multinational corporations.
The IPPR in their report to the Office of the Prime Minister questioned the potential impact of the proposed law on foreign-owned and multinational corporations and stated this should be clarified with a view to encouraging and incentivising investment and job creation.
“NEEEF has the effect of deterring investment and therefore undermining job creation. Enabling the creation of meaningful job opportunities in the private sector is probably the single greatest empowerment initiative the government could take.” IPPR stated in their report.
Currently it is still unclear to what extent NEEEF will impact foreign-owned businesses or multinational corporations, which usually have complex global ownership structures which are often decided by trading on stock exchanges. Any private sector enterprise that is established after the commencement of this Act may commence business only when such enterprise has secured 25% ownership by a racially disadvantaged person or persons or such higher percentage as may be determined by the minister by notice in the Gazette.
Other notable concerns raised by the IPPR include the restrictive and punishing nature of provisions in the NEEEF bill, stating that this measures must be revisited, especially in the case of new businesses and start-ups, as well as foreign companies, as current provisions would discourage both domestic and foreign investment and undermine business growth. “The shock associated with the presentation of a poorly-drafted NEEEF bill in February is already having a chilling effect on prospective investors who are now left waiting for an outcome to the NEEEF process before they make investment decisions.” said the IPPR.
In relation to the subject, after evaluating a substantial number of reports from businesses in the private sector handed in at the Office of the Prime Minister, the Economist sent enquiries through to the Office of the Prime Minister raising questions that are of unanimous concern to all businesses.
However, Ms. Fulgentia M. Mayira, the Deputy Director of Special Projects in the Office of the Prime Minister said that they, in collaboration with the Law Reform and Development Commission, are still in the process of ordering all inputs received, adding that inputs received varies from one point to another.