ZIA optimistic

negative perceptions around empowerment laws among others.
Herald Business (HB) this week spoke to Zimbabwe Investment Authority chief executive Mr Richard Mbaiwa (RM) for his take on various issues around inflows of FDI into the country. 
HB: Thank you Mr Mbaiwa for giving us an opportunity to have an interview with you. Could you start by telling us what the Zimbabwe Investment Authority is?
RM: Thank you. The Zimbabwe Investment Authority is a statutory body established by an Act of Parliament, the Zimbabwe Investment Authority Act (Chapter 14:30). 
The authority’s role is to promote, facilitate, regulate and co-ordinate all investment activities in line with Government policy. The major objective of the authority is to encourage increased investment in Zimbabwe by both domestic and foreign investors.
HB: Who is really coming to invest in Zimbabwe, I mean our major source markets?
RM: Our approval statistics show that the major source markets for investment include countries such as China, India, South Africa and Mauritius, among others.
HB: How effective has the One-Stop Shop Investment Centre concept been in the project approval process when compared to the previous systems?
RM: The One-Stop-Shop Investment Centre concept was launched in order to reduce administrative barriers that may inhibit investment and generally to improve the environment for doing business in the country. Since its launch in December, 2010 the OSS has seen significant improvements in the investment approval process, notably a reduction in the period within which an investor can obtain an investment licence from about 49 days to five working days.
There is, however, room for improvement especially in the area of co-ordinating and harmonising the processes of all the departments in the OSS.
This is a process that has to be looked at in the overall context of reforming the Doing Business environment in the country. Consultations are currently ongoing and there is a Comesa-assisted process that started this year with a workshop for all stakeholders to try and identify all the legislative instruments that have a bearing on investment and that will need the involvement of all key stakeholders including the private sector.
HB: We recently quoted Minister Mashakada as saying new foreign investments would be exempted from complying with indigenisation provisions. He said this was a Cabinet decision taken in June this year. Are you handling the foreign investment proposals in line with this new policy?
RM: What I can say is that consultations are underway to see how this policy can be put into effect.
HB: In your opinion why is Zimbabwe still lagging behind in attracting foreign direct investment when other countries in the region are receiving huge inflows?
RM: I think there is still an issue of perception, where investors perceive the country as not being an easy place to do business and also as a risky place. There is also an hangover from the past where we experienced serious economic decline and hyperinflation.
However, we are seeing that there is a steady improvement and if you look at the World Investment Reports published annually by UNCTAD, you will see that there has been a significant increase in investment inflows from as low as US$40 million in 2006 to US$387 million in 2011.
HB: How do you compare investment proposals in the dollarised environment and the Zimbabwe dollar era characterised by hyperinflation?
RM: Again, If I may use the World Investment Report statistics you will note that in 2008 total investment inflows amounted to US$52 million, in 2009 it was US$105 million, in 2010 the figure rose to US$166 million and in 2011 it was US$387 million. I would attribute the steady increase to the policies that have been adopted by Government including dollarisation, which has brought investor confidence back into the economy.
HB: What is ZIA doing to promote foreign direct investment?
RM: ZIA promotes investment in various ways, including undertaking foreign investment promotion road-shows and hosting incoming business delegations to showcase investment opportunities in the country.
We also take the opportunity to participate at various fairs and exhibitions domestically, regionally and internationally with the aim of marketing the country’s investment opportunities. We strive to make use of ICTs to market the country as an investment destination and this we do mainly through our website and other networks.
HB: How far has Zimbabwe gone in improving the Doing Business environment?
RM: Improving the Doing Business environment is an ongoing process. The launch of the OSS was just the first step and we need to continue working towards attaining an investment environment which is very investor friendly with absolute transparency in its rules and regulations. It is important that we manage the perception of investors so that the investment climate is not only conducive but is perceived to be so.
HB: What is your opinion on the indigenisation and empowerment programme?
RM: The indigenisation and empowerment programme is a very important part of the social and economic transformation process of this country. It is imperative that the majority of the populace of Zimbabwe be actively involved and participate in the economy rather than be passive bystanders. It is important that the policy be clearly explained so that all stakeholders have a clear understanding of the programme.
I think it is to the best interest of foreign and other non-indigenous investors to understand that is to their advantage to work with indigenous investors in undertaking their projects in a win-win manner. Unfortunately, there has been a wrong perception that indigenisation is a way of nationalising assets of foreign and non-indigenous investors. All of us, including you guys in the media fraternity, should do our best to dispel this myth; otherwise investors will continue to shun our country.
HB: How many projects have been approved this year?
RM: As at August 31, 2012, 112 projects were approved by the authority
HB: What was the total value of investment proposals last year and how many are being implemented?
RM: A total of 227 projects with a value of US$6,6 billion were approved in 2011. In my view it is too early to expect that these projects would be already up and running. We give investors two years within which to carry out their investment, failure of which they should advise the authority of the reasons thereof and their plans to implement the projects.
HB: It seems focus is largely on attracting foreign investments. What are you doing to encourage investments from locals and what could be the biggest challenge?
RM: It is not correct that our focus is on attracting foreign investment at the expense of local investments. Granted, FDI is very important in view of the fact that our domestic resources are not adequate to bring about the levels of investment required to grow this economy at the rates envisaged by Government. The Medium Term Plan has a target of having new investment contributing 25 percent to the country’s GDP by 2015 and this cannot be achieved with domestic resources alone.
However, local investors are encouraged to also play their part in the investment arena and as an authority we actively encourage joint venture partnerships between domestic and foreign investors. In my view the major challenge for locals is access to credit.  As we are all aware there is generally a liquidity crunch in the economy and this is the main problem for local investors.
HB: We have read about only a few projects reaching to implementation level. What could be the reason?
RM: We believe that every investor who comes to the ZIA to get their project approved and licensed has good intentions to invest in the country. However, some projects take time to get implemented for various reasons including capital raising, but they will still be in the pipeline, and yet others will never see the light of day due to various circumstances. Internationally it is accepted that an implementation rate of 25 percent and above is very good, so it is not a phenomenon unique to Zimbabwe that some approved projects will never take off the ground.
HB: A lot of reforms have been done to improve the country’s investment climate, in your opinion, is there anything that needs to be done to further improve the investment environment?
RM: Experience and best practice internationally will tell you that investment climate reforms can never be looked at as a once-off event. It has to be a continuous process. 
We should strive to improve the way we do business every day. As I indicated earlier, there is need to look at the various laws, rules and regulations that have a bearing on investment to see how they can be harmonised and also to see how best we can deal with the multiplicity of licences and permits required by investors in the various sectors of the economy and at different levels of the Government.
HB: What is the status on the Beitbridge Industrial Park?
RM: The Beitbridge Industrial Park is a project that was initiated under the then Export Processing Zones programme, with the idea being to provide an integrated facility for export oriented companies to locate and operate from. However, the facility was not completed due to resource constraints, although existing structures are being leased out to some tenants. It is our hope that in the future we will be able to mobilise resources from both Government and the private sector to complete this noble project and we believe that it can be achieved through a PPP model.
HB: As ZIA, what are your future plans?
RM: As an authority, our future plans are to achieve the status of a fully-fledged One-Stop Shop Investment Centre that becomes the only referral point for all investment issues in the country.
We need to be able to register all foreign investments in the country and ensure that no one comes through the back door. For effective processing, follow-up, monitoring and after care, we intend to develop an electronic-based customer relations management programme that will enable us to track the status of each investment at any point in time. The much talked about Investor Tracking System has faced a number of system challenges but we will unveil the system once it becomes fully operational. We will also be working with our parent ministry to relook at the authority’s organisational design with a view to coming up with a structure that is efficient and effective in delivering the authority’s mandate.
I am optimistic that there is great potential with regards to attracting FDI to Zimbabwe.