‘‘Zimbabwe is open for business.’’ Policies that the government of Zimbabwe has implemented to lure
It is always the duty of the government to make sure that it creates an environment that is investor friendly. This is to say that the government has to put in place policies and even regulations that make it possible and easier for investors to invest in the country. Both foreign and local investors should find the environment conducive for them to invest in the country by engaging into different economic activities .The main thrust of this essay is to assess the policies that the government of Zimbabwe has implemented to lure investors in the past two years (2016-2018) in line with the statement that “Zimbabwe is open for business’’.
Investment is the giving up of capital today in anticipation of receiving a return in the future, which may be income, appreciation or value gain (Arnold 2007). Zimbabwe is open for business has become a mantra for the new dispensation of Zimbabwe. This statement was uttered by the new president at an economic forum in Davos in 2018. Zimbabwe has been rated one of the poorest countries in the SADC region in a bid to alleviate poverty in the country and lure investors many policies have been put in place. Opening Zimbabwe for business is more like neglecting the look east policy and adopting foreign investors from all corners of the world.
To begin with is the Indigenisation Policy. The Indigenisation Policy was put in place in 2016. This Indigenisation and Economic Empowerment Policy was introduced with the aim of creating wealth and employment, poverty alleviation and the expansion of the domestic market. All foreign owned companies operating in Zimbabwe were mandated to cede 51% of their shares to indigenous Zimbabweans, through partnerships with business people, community share trusts and worker share trusts (Financial Gazette 7 Dec 2017). The government justified this move by looking back at the injustices of the colonial period and traced the penurious situation of majority of Zimbabweans to some of the racially skewed developments. The government put this policy in a bid to lure both foreign and domestic investors. The indigenization policy strived to ensure that indigenous people own and utilize their resources, so as to broaden the base of Zimbabwe‘s economy. This led to major foreign banks like Barclays selling their stake and other foreign owned companies opted to sell all of their shareholding in Zimbabwe to search for greener pastures elsewhere. The coming in of the new dispensation saw the revision of the policy. In its revision according to the minister of finance the 51/49 threshold will not apply to the rest of the extractive sector, nor will it apply to the other sectors of the economy, which will be open to any investor regardless of nationality (Financial Gazette Dec 7 2017).In other words this revision of the policy scrapped majority local ownership for most sectors except for diamond and platinum sectors. In a recent meeting held in Cape Town South Africa it was observed that investors were showing massive interest in investing in Zimbabwe’s mining sector (The Chronicles 21 March 2018). However a lack of clear guidelines surrounding the country's 'Indigenisation' Act and the use of US dollar pegged bond notes will likely continue to deter foreign investment in the medium to long term.
The liberalization of the RBZ foreign exchange regulatory framework is another policy which was put in place to lure investors into the country hence supporting the opening of Zimbabwe for business. One can call this the revision of the country’s monetary policies. According to this new reform foreign investors would be freely allowed to remit investment income such as dividends and profits up to a hundred percent from their investments to various destinations of the world and this would be done without seeking approval from the Reserve Bank, requests to remit investment income to external destinations would now be handled at authrorised dealer (bank) without coming to the reserve bank. This would mean that there is minimum government intervention in investors' operations. This also allows for freedom in cross border transactions and also ensures free movement of capital. It is rather an incentive that would attract more investors to the country hence opening Zimbabwe for business. However Zimbabwe is using its own currency (bond notes) which is not recognised on the foreign market hence making it hard for the investors to repatriate their funds thus seeing many investors not coming to invest in Zimbabwe.
The Zimbabwe Agenda for Socio Economic Transformation (ZIMASSET) is also another policy which has been put in place by the government of Zimbabwe to lure investors. This plan is meant to run from 2013 to 2018, with the blueprint plan being in its second phase which runs from 2016 to 2018. This blueprint is the country’s plan to achieve sustainable development and social equity through indigenisation, empowerment and employment creation (Bonga 2014). The plan revolves around four clusters which are food security and nutrition, social services and poverty eradication, infrastructure and utilities, and value addition and beneficiation. The strategy has a vison of investing in sustainable food security solutions, increasing economic opportunities for women and the youth ,expanding the accessibility and utilisation of ICT ,building and rehabilitating infrastructure and utilities ,establishing SEZs ,and recapitalizing and capacitating development finance institutions, amongst others(Bonga 2014). Investors would be allowed to come into Zimbabwe to invest as long as their endeavors will help meet the goal of the blueprint. However it should be noted that since the implementation of the blueprint not much has been achieved but a follow up of the ZIMASSET II is currently under development for the period 2019-2023 and this is expected to see many investors coming to invest in Zimbabwe.
In a bid to lure investors the government put in place the National Diaspora Policy (NDP) with the help of UN Migration Agency and the European Union in July 2017.The implementation plan is set to develop the country’s 2017–2022 National Diaspora Policy Implementation Action Plan. The Plan will serve as a framework for engaging with the Zimbabwean diaspora worldwide (World Migration Report 2018). It is because the government realized the importance of the Zimbabwean Diasporas to the country that this policy was put in place. The operationalisation of the 2016 adopted National Diaspora Policy through a well-defined action plan comes against a background of increasing government acknowledgement of the potential of the Zimbabwean diaspora in contributing towards national development. The Government recognized that beyond the remittances from abroad, our diaspora presents social, economic, intellectual and political capital, a pool of knowledge and expertise which must be harnessed for the benefit of the country,” said Judith Kateera, the Permanent Secretary in the Ministry of Macro Economic Planning and Investment Promotion, in a speech read on her behalf at the meeting (World Migration Report 2018). The Government of Zimbabwe has demonstrated commitment to creating institutional structures that promote diaspora engagement in the national development agenda. The adoption of the National Diaspora Policy in July 2016 and the establishment and launch of the Diaspora Directorate in September 2016 are testimony of such commitment. The Zimbabwe Government acknowledges the importance of the Zimbabwean Diaspora to the country and has instituted measures to facilitate the integration and participation of the Diaspora in economic development. The policy is a comprehensive national framework which is the reference point for the Government of Zimbabwe and all other stakeholders to challenges and opportunities presented by the Diaspora. The policy has been a success as many Diasporas are coming to invest in Zimbabwe especially after the coming in of the new dispensation.
In an endeavor to attract foreign direct investment, the Special Economic Zones Act(Chapter14:34) was promulgated in the last quarter of 2016.This act saw the implementation of the first stage of three prioritised projects namely Sunway City in Harare ,Bulawayo Industrial Hub ,Special Economic Tourism Zone Corridor stretching from Victoria Falls Hwange National Park Binga Kariba to Mana Pools ,Victoria Falls Financial Services Special Economic Zone and Diamond Cutting and Polishing Special Economic Zone in Mutare(The Standard 4 June 2017). Incentives were set for SEZs to attract investments and increase exports. The zones will also aim at promoting value addition and beneficiation by offering targeted and specific incentives to qualifying investment (The Standard 4 June 2017).Everything seemed to be in order for the pilot of Special Economic Zones but in reality that was not it. Whilst Special Economic Zones could have been a great initiative in serving its objectives, it is sad that until June 2017, there were no active Special Economic Zones, The Minister of Macro-Economic Planning and Investments Promotions cited the need to setup a SEZ board and authority before putting in place the Special Economic Zones, a move which he made by 22 June 2017. Chinese investors expressed eagerness to operate in these zones but despite the growing interest the government was moving slowly.
In September 2016 during the Mid-Year Policy Review, the Minister of Finance and Economic Development used the rate and level of investment license renewals as an indication of high interest in investing in the country. In regards to this, he indicated that there was need to introduce initiatives to enhance investor confidence among existing as well as potential investors. Based on the 2016 Policy review, Zimbabwe was just opening for business. According to Zimbabwe Investments Authority’s statistics used by the Minister, only investments license renewal were initiated and those renewing were likely to be the same companies registered over the years like Anglo American Corporation. This showed how harsh most of our policies were before amendments and contributed to loss in Foreign Direct Investment thereby maintaining the unemployment rate which has been high for the past decade. In trying to curb this, the government implemented the Ease of Doing Business Reforms to improve the investment climate as well as strengthen Zimbabwe’s competiveness in the global arena to advance well. The reforms were meant to eliminate the disproportionate high regulatory, transactional and administrative burden that was mostly borne by businesses operating and wanting to operate in Zimbabwe. Indeed, such reforms improved the country’s ease of doing business ranking from 157 in 2015 to 161 in 2016, therefore, bears testimony to the positive trajectory of such reform initiatives. Thirteen Reforms were proposed and by end of May 2016, nine reforms has been approved by cabinet, showing the government’s effort in increasing the ease of doing business. These were administrative and legislative reforms in the areas of starting a business and protecting minority investors, enforcing contracts and resolving insolvency, getting credit, paying taxes and trading across borders, construction permits and property registration thus opening doors for business in Zimbabwe. The legislative reforms were targeting the companies Act and ancillary legislation, whilst the other facet deals with reforming the procedural, time and cost elements of doing business. At this point, Zimbabwe was targeting to be below 100 on Ease of Doing Business Ranking by end of 2016, a target which was not met as some policies were still debated upon. The involvement in business of Cabinet members contributed to such delays as one would not be willing to make reforms which might reduce the chances of making more money through bribery, furthermore government business was politically affiliated, making sure that reforms are made mostly to benefit the political elite, Marange Diamond and ZMDC operations among others are example of such corrupt activities.
The Zimbabwe Investment Authority was set in 2004.The Zimbabwe Investment Authority (ZIA) is the country's investment promotion body set up to promote and facilitate both foreign direct investment and local investment. ZIA is an institution born out of the merger of the Export Processing Zones Authority (EPZA) and the Zimbabwe Investment Centre (ZIC). This was done to create a one stop investment shop for quicker and easier facilitation of investment. The policy of this authority was amended in 2017.This was done so as to plan and implement investment promotion strategies for the purpose of encouraging investment by domestic and foreign investors, also to facilitate and process investment applications for approval and to identify sectors of the economy with potential for investment for the purpose of attracting domestic and foreign investors ,to promote the decentralization of investment activities in accordance with the development policy of the government. The success of this policy has not be noted as of late as the policy has been recently reviewed so as to welcome investors. ZIA has key sectors which it focuses on these are agriculture, tourism, manufacturing, mining and quarrying and infrastructure.
Also the Automated Systems for Customs Data (ASYCUDA) plus online system is another policy that was set to improve the Zimbabwean investment environment. ZIMRA uses ASYCUDA world for all its customs processes. ASYCUDA is a system designed to help countries automate Customs processes on the importation or exportation of goods and compile accurate trade statistics. The system is also used for online pre-clearance of goods, insurance of road access fees, payment and processing of temporary import permits for vehicles. In January 2018 the government realized $9, 3 million for immediate setting up of facilities to rid the border post of bottlenecks and put in place a conducive working environment for boarder officials (Zimbabwe National Budget 2018). This policy was put in place to promote the coming in of investors as it eases the means of doing business especially in the transportation sector hence opening Zimbabwe for business.
In a bid to improve the business environment and lure investment, the Government of Zimbabwe in collaboration with the World Bank embarked on a Rapid Results Approach. The World Bank is using the rapid results approach (RRA) to link leadership to managing for results through practical capacity support to clients. The Bank helps leaders engage operational teams in government to achieve tangible results in 100 days (Lawrence 2008). In the process the RRA reveals institutional bottlenecks; and diagnosing and removing these can help make a government more effective. This was done so as to improve the country’s ease of doing business. The reforms were meant to resolve and remove structural and process bottlenecks from the system. The approach is responsible for simplification of procedures, and reduction in time, cost and minimum capital to open a new business. The Government undertook a procedure to reduce the days for starting a business from the current 30 days to 15 days, reduction in the number of days for getting construction permits from 448 days to 120 days and reduction in the period of property registration from the previous 36 days to 4 days and decentralisation to local authorities (Techzim 2017). The implementation of this policy was a success as investors starting showing interests in investing in Zimbabwe.
To attract investors the government of Zimbabwe has implemented a new investment policy. The new investment policy seeks to lure investors through different favourable working terms. The policy has key principles which it has and these are expected to lure investors. According to the 2018 Investment Guidelines and opportunities the principles are the commitment by the government to treating all foreign and domestic investors and investments favorably as any other investor in like situation in relation to the establishment, expansion, operation and protection of their investments subject exceptions are provided for in domestic laws and regulations. This is more like advocating for non -discrimination between domestic and foreign investors. Effective protection of property, transparency and good regulatory practices, to maintain environmental and social standards, promote investment retention, avoid mandatory performance requirements ,facilitate entry and sojourn of personnel, and to pursue high standards of governance are also other principles of the policy. These principles provide investors with a good environment favourable to investment hence it will see many investors investing in Zimbabwe. However it should be noted that the policy is still in its early days of implementation hence its success cannot be measured.
The National ICT policy is another policy which was put in place to lure investors. Government and various stakeholders will on March 21 officially launch the process of implementing the National Information Communication Technology (ICT) policy, which was crafted in 2015, an official has said (Newsday March 9 2018).Zimbabwe first launched its National ICT Policy Framework in 2007, but the document was overtaken by developments in the fast-growing sector. In 2015, Zimbabwe developed a fresh ICT policy, which was meant to buttress efforts to grow its fragile economy. The launch of the process to implement the National ICT policy would focus on attracting investment into the sector, among other key objectives, the launch would also explore avenues of copying and adapting in light of the rapid changes sweeping through the ICTs sector. “The launch of the operationalisation and implementation process will outline the National ICT policy options and possible approaches that the Zimbabwe Smart Sustainable Cities Initiative will take to achieve the set objectives, while seeking public input on which way best will realise these goals (Newsday 9 March 2018). This move is set to attract investors to the country since most operations in the world are becoming technologically operated. The launch will attract representatives from leading ICTs firms such as Huawei, Econet Wireless Zimbabwe, Udugu Hub and Mango thus attracting investors in the country.
Since the coming in of the new dispensation the government of Zimbabwe has stated its intention to compensate those farmers who lost their investment through the land redistribution programme. This is expected to run in a fair and equal manner. To ensure equitable compensation, the government of Zimbabwe is considering a number of measures including the establishment of a special ad hoc tribunal based on international good practices to determining the value of compensation payable and modalities for payment (Investment guidelines and opportunities 2018). This shows that Zimbabwe is open for business.
In conclusion it can be noted that the government of Zimbabwe from 2016 up to date has been trying all the means possible to lure investors into the country. This was done through the implementation of different policies as shown by the above mentioned policies. However one has to note that some of the policies were successful but some cannot be measured their success as they were undergoing reviews hence it will be too early to measure their success or failure.
REFERENCES
2018 Investment Guidelines and Opportunities.
Arnold, G. (2007). Essentials of Corporate Financial Management. Pearson Education.
Bonga, W. (2014). Economic Policy Analysis in Zimbabwe: A Review of Zimbabwe Economic Policies: Special Reference to Zimbabwe Agenda for Sustainable Socio-Economic Transformation (Zim Asset).
ICT policy launch set -Newsday 9 March 2018.
Lawrence, M. 2008. The Rapid Results Approach: A Tool for Leadership Development and Institutional Change. Africa Region Findings & Good Practice Info briefs; No. 290. World Bank.
Special Economic Zones long way out – The Standard 4 June 2017.
The 2016 Mid-Year Fiscal Policy Review Statement.
Various Bills to Improve Ease and Cost of Doing Business in Zimbabwe to Be Fast Tracked-Techzim 2017/12.
Zimbabwe Develops National Diaspora Policy with UN Migration Agency Support -World Migration Report 2018.
Zimbabwe is open for business – Chronicle, 21 March 2018.
Zimbabwe National Budget Statement for 2018.
Zimbabwe scraps Indigenisation policy, except for diamonds and platinum-Financial Gazette 7 December 2017.
