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Lovemore Chikova Assistant Editor
The setting up of the Zimbabwe Investment Development Agency (ZIDA) is a game changer that will ensure the attraction of foreign direct investment to the country.
There are many reasons why this is so.
The proposed investment agency offers solutions to some of the problems that have been bedevilling the country when it comes to attracting foreign direct investment.
ZIDA will enhance the ease of doing business in line with the mantra that “Zimbabwe is open for business”.
The Zimbabwe Investment Development Agency Bill that was published in the Government Gazette recently is part of the reform agenda being pursued by President Mnangagwa’s administration to ensure the country achieves upper middle income status by 2030.
It is evident that despite foreign capital being touted as having the potential to transform the economy, Zimbabwe has been failing to attract meaningful capital from abroad.
Foreign direct investment has been coming in dribs and drabs, always not coordinated enough to bring tangible results to the economy. This has led some critics to question why the hype on foreign investment has not been matched by increased arrival of investors.
Corruption was one of the major ills cited for discouraging investors from bringing their money to Zimbabwe in the huge amounts that everyone expected. Then there is also the cumbersome process that confronted the would-be investors, who have to move from one office to another to obtain the necessary documents to start operations.
It was always untenable that the burden was placed on the potential investors, who had to literally beg Government officials for them to acquire the necessary documents to start their businesses in Zimbabwe.
The bureaucracy was just too much, resulting in many investors abandoning their good intentions after being frustrated.
It is imperative that such bottlenecks are removed, and that is exactly what the new investment agency will achieve. ZIDA is expected to fight two wars from one front once it successfully goes through Parliament.
The two war fronts are corruption and bureaucracy. There are just too many bodies and entities that deal directly with foreign investment in Zimbabwe to the extent that getting the required documents to start operations takes eternity.
This discourages would-be foreign investors and brings doubts on the security of their investments. But ZIDA will disband the Zimbabwe Investment Authority, the Zimbabwe Special Economic Zones Authority and the Joint Ventures Unit, bodies that deal with foreign investors.
The entities will then make up ZIDA.
Officers from the Zimbabwe Revenue Authority, the Environmental Management Authority, Companies Office, the Reserve Bank of Zimbabwe, the National Social Security Authority, the Zimbabwe Energy Regulatory Authority, the Zimbabwe Tourism Authority and the State Enterprises Reform Agency, will be housed under the same roof at the ZIDA offices.
The effect of this move is that within a day, the investor will be able to register a company, obtain a tax certificate number, an environmental impact assessment certificate, a NSSA number and many other necessary documents.
This system will eliminate corruption that used to confront potential investors the moment they arrived at the airport.
There were too many “runners” and third parties that took advantage of the cumbersome process to induce investors to pay bribes for short-cuts to obtain the necessary documents. This unwarranted role of the “runners” will be removed by the new investment institution.
In fact, the system was not well coordinated, placing the burden on the investors, most of whom were not happy with the long and winding process of obtaining the documents.
The direct involvement of Government ministers in dealing with investors also left a lot to be desired. There were many instances when the ministers and other officials in the ministries were accused of sitting on the investors’ papers or making demands that were difficult to fulfil in a bid to frustrate them.
That ZIDA removes this direct involvement of Government ministers and their officials from dealing with the investors is a huge milestone. With the establishment of ZIDA, it is clear that President Mnangagwa’s administration is taking its reform agenda seriously.
The investment agency is part of the solution to the problems that have been bedevilling efforts to attract foreign direct investment.
Foreign direct investment is one of the aspects expected to push the attainment of Vision 2030, which entails the country obtaining upper middle income status.
Foreign investors can be an important source of capital formation, can help transfer technology, increase export competitiveness and create employment.
With ZIDA, it shows that President Mnangagwa is not only proffering solutions to the country’s developmental agenda, but is going ahead to establish the necessary institutions to ensure the set goals are attained.
When it comes to foreign direct investment, investors should get good deals that enable them to make their profits, while Government ensures the capital also benefits the country.
It should be a win-win venture.
But this can only be achieved if there is certainty and efficiency, the two crucial ingredients which ZIDA will bring as part of the economic reform process.
The agency guarantees investors that their investments will not be nationalised or expropriated, except in extreme circumstances, with no investor being compelled to cede an investment to another person either directly or indirectly.
Investors are attracted by rules and policies that are applied in a constant manner, as this assures them of good business.
In fact, capital flows to where it feels safe, and ZIDA will create that safe haven for foreign investors. In this context, ZIDA is important in that it institutes rules and regulations on foreign investors, especially the nature of the rights enjoyed by the investor on one hand and Government on the other.
The new investment agency is created on the basis of enhancing the ease of doing business, a move that appeals to serious foreign investors because it brings efficiency and clarity.
This is why the ZIDA Bill guarantees transparency in the handling of foreign investments and allows the investors to move funds in and out of Zimbabwe without restrictions or delays.
Incentives that are applicable to investors will be published, with ZIDA expected to ensure that the incentives are granted.
The investment policies to be pushed by ZIDA are a central part to the development strategies being put in place by the New Dispensation. But this is not to say that foreign direct investment alone can result in the overnight change of fortunes for the country, it can only help contribute to the wider agenda of economic recovery.
It is welcome that Government is working on other aspects of the economy that will ensure that such ills as inflation and the shortage of foreign currency are addressed.
The Transitional Stabilisation Programme, which is the guideline to the New Dispensation’s economic recovery efforts, is expected to steady the economy within a few months.
This will create a conducive environment for foreign investment.
Foreign capital is expected to ensure reinvestment in the country’s industrial base, and bring advanced technology to spur industrial growth.
ZIDA is coming at a time when development thinkers are taking foreign direct investment as a serious model for industrial growth and modernisation.
In fact, there are many countries, especially in the East, that have made a great leap forward in their developmental agenda on the back of foreign direct investment.
This is more evident in countries like Singapore, China and South Korea, which have successfully harnessed foreign direct investment to back their industrial parks and acquire technological advancement.
Zimbabwe can also learn from Ethiopia, which has managed to attract investment in its special economic zones which were toured by President Mnangagwa in February this year.
The Ethiopian government managed to attract investment in the industrial parks after building factory shells.
At least 45 000 people are now employed in such industrial parks across Ethiopia.
The world market for foreign investors is highly competitive, making ZIDA crucial in helping bring Zimbabwe at par with other countries in that tight competition.
Zimbabwe possesses the necessary ingredients for the attraction of foreign investors such as its vast mineral resource base, well-equipped human resources, good infrastructure and its strategic location in the region.
The ZIDA Bill states that the organisation will provide for the promotion, entry, protection and facilitation of investment.
Apart from being a one-stop investment centre, ZIDA will “work with Government and interested stakeholders in using modern communications methods to promote Zimbabwe as an attractive investment destination”.
Investors will be allowed to invest in, and reinvest their profits into any and all sectors of the economy.
ZIDA also calls for fair and equitable treatment of investors and every investor will be protected against denial of justice in criminal, civil or administrative proceedings.
But this can only be done in cases of public purpose, in accordance with the due process of the law, in a non-discriminatory manner and on payment of prompt, adequate and effective compensation.
Online Reporter