AFP reported that Zimbabwe last week won its biggest foreign investment in a decade with a USD 750 million steel deal, but that left other firms even more confused about the rules of business in the troubled nation.

The agreement gives India's Essar Group a 54% stake in the mothballed state steel firm Zisco, in a deal worth 12.5 times the total foreign investment recorded in Zimbabwe in 2009.

But the deal contravenes Zimbabwe's new equity law, which requires locals to hold majority stakes in major companies. Officials have tip toed around the contradiction, but it's not the first time the new rule has been waived.

In September 2010, pan African banking group Ecobank Transnational was given the green light to acquire 70% of Zimbabwe's Premier Bank, following a USD 10 million capital injection.

Other companies now wonder how or if the law, vociferously defended by veteran President Robert Mugabe, will apply to them.

Mr Kojo Parris, a South African investor, said that "Many people are worried about the execution of the law or how it would be applied. There is need for clarity on how the law would be applied or how exemptions would be applied."

The law requires locals to own 51% stakes in major firms, a rule that indigenization minister Mr Saviour Kasukuwere defended during an investment conference. He said that "We believe as government we were getting a raw deal from foreign firms, especially from mining sector."

When Zimbabwe's unity government took office two years ago, officials confidently predicted a surge in foreign investment, which until now has proved elusive.

(Sourced from AFP)