By Calvin Manika
AT the dawn of a new government administration of Zimbabwe in 2017, masses of Zimbabwe were left with hope as President Mnangagwa announced that farmers whose land was expropriated without compensation, will be recompensed. The news was received with mixed feelings locally but with great anticipation by the former white farmers in Zimbabwe. This was one of the baits of ‘Zimbabwe is open for business’ mantra.
“It was clear, even to this date, that despite a bad reputation on the international arena, Zimbabwe wants investment especially Foreign Direct Investment (FDI). Farming is one of the areas (agro-business), Zimbabwe Investment and Development Agency (ZIDA) is marketing. So, it was just a starting point to encourage entrepreneurs,” said Makanaka Chonho, an economic analyst.
After the land reform programme in 2000, Zimbabwe put a law of indigenisation and empowerment in certain sectors. The law required foreign investor to concede 51% of their capital to native Zimbabweans. In addition, in late 2013 a law was passed which forbids foreigners from owning small business in Zimbabwe. The law was later amended with the new administration scrapping the 51% clause in many of the sectors except for critical sectors like mining of diamond, gold and platinum to attract investments.
Few years later Zimbabwe seems to be aggressively continuing its campaign on engagement and re-engagement efforts to attract investments. In a bid to lure Foreign Direct Investment (FDI), the Government of Zimbabwe is running the Zimbabwe Investment and Development Agency (ZIDA), responsible for promoting and facilitation of both local and foreign investment in the country.
Zimbabwe went on a further step to promulgate the ZIDA Act, which repealed the Zimbabwe Investment Authority, the Zimbabwe Special Economic Zones Authority and the Joint Ventures Act. ZIDA chief facilitator Never Nyemudzo, while speaking recently to investors from South Africa said, the new act provides a clear, comprehensive and binding legal and regulatory framework for conducting investment activities, by both domestic and foreign investors in the country.
“ZIDA operates a One Stop Investment Services Centre (OSISC), which provides investment services ranging from investment analysis, company registration, tax registration and clearance, licensing, connecting to all necessary utilities, investment promotions, public relations and aftercare services. These services were previously provided by different entities scattered all over the place,” Nyemudzo said.
According to Zimbabwe Investment And Development Agency Act [Chapter 14:37], its “An act to provide for the promotion, entry, protection and facilitation of investment; to provide for the establishment of the Zimbabwe Investment and Development Agency; to provide for the One Stop Investment Services Centre; to repeal the Zimbabwe Investment Authority Act [Chapter 14:30], the Special Economic Zones Act [Chapter 14:34] and the Joint Ventures Act [Chapter 22:22]; and to provide for matters incidental to or connected to the foregoing.”
ZIDA is applauded for having significantly integrated and abridged the procedures thereby reducing the turnaround time for investing in the country. Zimbabwe allows at law the cultivation of cannabis on certain terms and ZIDA facilitates investments into medicinal cannabis cultivation, processing and value addition. The investments are regarded as special investments into Zimbabwe. Through ZIDA, Zimbabwe offers monetary and fiscal incentives to ensure that the sector is competitive regionally and globally.
Mining and Energy are other areas ZIDA is promoting for investors to mine vast minerals dotted around the country. This includes chrome, coal, nickel, gold and other precious stones. The issue of Energy is at the top lost of Zimbabwe to create conducive investment ground. However, the country is facing some erratic electricity supply for the past months with government saying it is giving preference to winter wheat farming. Agriculture remains the backbone of Zimbabwe economy.
According to World Bank, FDI flows to Zimbabwe are far below the country’s potential due to the recession the country experienced in 2019 following the passage of Cyclone Idai and drought caused by El Niño, and the economic and health crisis triggered by the Covid-19 pandemic. According to the UNCTAD’s 2021 World Investment Report, FDI inflows declined significantly to USD 194 million in 2020, compared to the pre-crisis period (USD 745 million in 2018).
Zimbabwe ranked 140th out of 190 countries listed in the World Bank’s last Doing Business Report, published in 2020, gaining fifteen places compared to the previous year’s report. In particular, progress has been made in obtaining building permits, obtaining loans and resolving insolvency.
Chonho said as the government seeks to attract FDI and is implementing ZIDA, which is the country’s investment promotion body set up to promote and facilitate both foreign direct investment.
“However, the unpredictability of the government’s economic policies and the unstable political and economic climate in recent years has undermined foreign investment,” Chonho said.