Mugabe nationalisation law surprises foreign businesses

British companies are seeking details of Zimbabwean legislation that would enforce local ownership of their operations after Robert Mugabe, the country's president, surprised observers by signing a Bill requiring them to hand over control.

Many people had thought the Bill requiring foreign businesses to offer 51 per cent stakes to black Zimbabweans had lapsed. Mr Mugabe had left it unsigned after it was passed by Parliament in September, but he signed it on 7 March.

UK companies operating in Zimbabwe include Barclays and Standard Chartered. Both banks have been in the country for about 100 years.

Barclays said: "The implementation details of this law are still unclear. Once further information is available we will assess it in more detail and decide on what steps we should take." Barclays has 1,200 employees and 187,000 customers in the country.

Standard Chartered also said it was seeking clarification. Standard Chartered has about 860 staff and 78,000 customers in Zimbabwe. The bank wrote down the value of its Zimbabwe business in 2005. Other UK-listed companies in Zimbabwe include the miners Rio Tinto and AngloAmerican, which both said they had small operations there.

The Indigenisation and Economic Empowerment Act may not cover mines but of greater concern would be the Mining and Minerals Amendment Bill, which has not yet been passed by Parliament. It is understood that the legislation would involve handing over a 25 per cent share to the Government as part of putting 51 per cent in Zimbabwean hands. Companies might also have to pay punitive royalties.

Rio Tinto employs more than 200 people in Zimbabwe where it has a small diamond mine called Murowa. AngloAmerican has a platinum "project" which has not yet been developed into a mine and employs about 400 people in the country.

A Rio Tinto spokesman said: "Rio Tinto is supportive of a move towards indigenisation provided it is done at the right pace and doesn't discourage much-needed overseas investment in the Zimbabwean mining industry." The Murowa mine is 22 per cent-owned by a Zimbabwe-controlled partner called RioZim, he added.

Some observers believe Mr Mugabe may have signed the Bill as a gesture because he is fighting a tough election battle with his former finance minister, Simba Makoni. Zimbabwe goes to the polls later this month amid widespread hunger, mass unemployment and 100,000 per cent inflation.