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Senior Reporter
The establishment of the Zimbabwe Investment and Development Agency (ZIDA) in 2020 has brought joy and a ray of hope to both domestic and foreign investors, who had endured the tiresome red tape experienced in the past.
On December 17, 2020, President Mnangagwa performed the final rite that completed the setting up of ZIDA.
He officially launched the agency in the presence of his two Vice Presidents Constantino Chiwenga and Kembo Mohadi and several Government and ZIDA officials.
It was a grand finale following months of several other steps in the build-up.
Owing to its successes in the past two years, ZIDA is targeting US$4 billion worth of investments from both domestic and foreign sources this year.
This comes as the Second Republic’s thrust towards engagement and reengagement with the outside world under the “Zimbabwe is Open for Business” refrain continues to bear fruit
The promulgation of the ZIDA Act was a signal from the Government that the days of honeymoon and unnecessary bottlenecks that resulted in the loss of potential investments in the country were over.
The birth of ZIDA came at a time Zimbabwe was recovering economically, a momentum which has been maintained since then.
ZIDA chief executive officer, Mr Tafadzwa Chinamo, recently revealed at the official launch of Zimbabwe’s participation in the Expo 2025 Osaka in Japan.
Mr Chinamo said the onus was on Zimbabwe to ensure its exhibitions did stand out during the Expo, and effectively portray the vast investment opportunities available in the country.
“With all those exhibitors, with all those countries there and all those visitors, how do you stand out? I think it is our task from today until we actually go there and start showcasing ourselves, he said.
“We have already spoken about it; the opportunities are there and they are known. We are not the only country with lithium, with gold, with chrome, with nickel and with tourism. Everyone else has got all those things, so collectively, if we also take our private sector with us, and they take the lead and we take the supportive role, I think we stand a better chance of closing those deals.”
Mr Chinamo said they were targeting US$4 billion worth of investments this year and US$5 billion next year.
“On our part as ZIDA, we are quite excited with what we can achieve. This year alone, we are targeting total investments, domestic direct investment through us, foreign direct investment and reinvestment, of about US$4 billion. Next year with Osaka in mind, and the preparations that we are going to have towards that, I think we can easily hit US$5 billion,” he said.
Established in 2020 through the ZIDA Act, the agency promotes investment and development by facilitating both local and foreign ventures in the country. It was born out of three investment authorities previously housed in different Government ministries and departments.
The promulgation of the ZIDA Act, which repealed the Zimbabwe Investment Authority Act, the Zimbabwe Special Economic Zones Authority Act and the Joint Ventures Act, provides a clear, comprehensive and binding legal and regulatory framework for conducting investment activities, by both domestic and foreign investors in the country.
These institutions often carried their work at variance with each other, pronouncing contradictory policies, rules and regulations that ended up annoying some investors.
Under ZIDA, 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.
ZIDA effectively creates a One-Stop Investment Service Centre for investors, raising hope that those with capital will soon find it much easier to bring it for investment in Zimbabwe.
The beauty of this agency is that it will cut the process of having potential investors move from one office to another in search of the right papers to start their business.
This cumbersome process entailed that the investor would end up spending more time waiting to access the right papers, instead of planning and implementing their projects.
It all started when President Mnangagwa visited Rwanda for the African Union Extraordinary Session of the Assembly of Heads of State and Government in early 2018.
While there, he took the opportunity to visit the Rwanda Development Board, where he was impressed by how the board managed to help that country turn into a darling for investors.
The President asked his Rwandan counterpart, President Paul Kagame, to allow the board’s chief executive officer, Ms Clare Akamanzi, to come to Zimbabwe to interact with his officials.
Ms Akamanzi then visited Zimbabwe for a series of workshops with Government officials on how effectively they could set up ZIDA.
In a one-on-one interview with The Herald in January 2021, Ms Akamanzi explored the benefits the Rwanda Development Board brought to her country, and what the envisaged ZIDA could do for Zimbabwe.
She made it clear in that interview published under the headline “If Rwanda could do it, Zim can do it”, that the Rwanda Development Board was created as a single-point organisation for investors.
Ms Akamanzi said its creation was a signal in a very practical way to investors that Rwanda was taking facilitation of investment seriously and the country was dedicating an organisation to focus on the key components that investors needed.
One of the insights of the interview was when Ms Akamanzi revealed that before the board was set up, investors would deal with many institutions, making the process of starting a business too long.
Before the board was formed, it would take about 12 procedures, resulting in more than three weeks of waiting, costing US$450 on average to just register a business.
Ms Akamanzi revealed that all of that is now done online at the Rwanda Development Board free of charge, making it much easier for businesses to operate.
This has resulted in an investor being able to set up a company within six hours.
Soon after the visit by Ms Akamanzi, attention shifted to the Zimbabwe Investment and Development Bill, which was passed by Parliament at the end of 2019.
The passing of the Bill and its eventual signing into law by President Mnangagwa clearly indicated how the Second Republic emphasised on investment as playing a big part in its developmental trajectory.
After he signed the ZIDA law, President Mnangagwa then appointed United Refineries chief executive, Mr Busisa Moyo, as the board chair, while top private sector investment executive Mr Douglas Tawanda Munatsi came in as the chief executive officer.
Other members of the ZIDA board were Dr Tobias Takavarasha, Mr Kenneth Richard Rupert Schofield, Dr Sylvia Janet Utete-Masango, Mrs Sithandile Ngwenya, Mrs Tariro Ndebele, Engineer Michael James Tumbare, Mrs Nancy Samuriwo and Mr Moosa Hanif Allana.
As anticipated at its inception, ZIDA accords foreign investors and their investments the same treatment with local investors under the same circumstances, with respect to the establishment, acquisition, expansion, management, conduct, operation and sale or other disposition of their investments.
Another milestone brought by ZIDA, which safeguards investors’ interests, is that no investments will be nationalised or expropriated.
The investors will operate freely without being compelled to cede any investment to another person, either directly or indirectly through measures having an effect equivalent to nationalisation or expropriation.
Incentives are one of the most important considerations by investors, since they determine if it is worthwhile to commit their capital to a particular destination.
In fact, one of the most debated areas when it comes to attracting foreign direct investment has been around incentives.
Before ZIDA, there were too many organisations dealing with investors to such an extent that the offering of incentives was not properly coordinated.
But proper guidelines on incentives, which will be published by the Minister responsible for Finance, will be set under ZIDA.
These guidelines include:
- General incentives that may be applicable to licensed investors, whether foreign or domestic
- Special incentives that may be applicable to specific categories of licensed investors such as primary producers, exporters, and investors involved in value-addition and import-substitution projects, whether foreign or domestic; and
- Any other incentives and conditions that may be applicable to investors, whether foreign or domestic; and in so doing, ZIDA may specify different incentives for domestic and foreign licensed investors.
ZIDA will also take care of the Special Economic Zones, being empowered to declare any area or premises as a Special Economic Zone.
When dealing with an application for an investment licence in the Special Economic Zone, the investment agency considers the degree of export orientation or import substitution of the project and the extent to which the proposed investment will promote industrialisation of the domestic economy.
Also, ZIDA considers the extent to which skills and technology will be transferred for the benefit of Zimbabwe and its people; and the extent to which the proposed investment will lead to the creation of employment opportunities and the development of human resources.
Another important mandate for ZIDA is the issuance of operating licences to investors, while handling public-private partnerships.
It is envisaged that ZIDA will eventually decentralise its operations to provinces to help attract investment for local communities in line with the devolution policy.
According to a World Investment Report, foreign direct investment (FDI) was stagnant at US$400 million between 2010 and 2013.
In 2018, the country recorded foreign direct investment inflows of US$745 million, up from US$349 million in 2017.
FDI inflows went down to US$280 million in 2019, but it was expected to have drastically risen in 2020, following massive investments, especially in mining.
ZIDA has made notable strides on the international front resulting in the trickling in of investors into Zimbabwe.
Last year, ZIDA signed a cooperation agreement with the International Finance Corporation (IFC), which was anticipated to see the agency receiving technical and advisory support in investment promotion and special economic zones (SEZs) policy framework in a three-year timeframe.
To be implemented under the Zimbabwe Investment Policy and Promotion Programme (ZIPPP), the momentous collaboration will boost ZIDA’s operationalisation and capacity development imperatives.
A member of the World Bank Group, IFC is a global financial institution that offers investment, advisory and asset management services aimed at spurring on private sector expansion in less developed countries.
World Bank Country Manager for Zimbabwe, Ms Marjorie Mpundu, said she was elated to witness the historic occasion, saying her group had been working closely with the Office of the President and Cabinet towards the Government’s development agenda.
ZIDA chairman, Mr Busisa Moyo said the signing of the cooperation agreement with IFC was “a small but very significant step in the life of Zimbabwe”, which dovetails with the Government’s push to embrace a private sector-centred and foreign direct investment-led economic development programme as enshrined in National Development Strategy 1 (NDS 1).
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