SOUTH African investors have expressed grave concern over the hostile business environment in Zimbabwe, underlined by serious policy impediments such as uncertainty of land tenure, delayed payments for goods and services as well as difficulties faced in repatriation of dividends, it has emerged.
BY LISA TAZVIINGA
Confidential minutes from the Zimbabwe-South Africa Bi-National Commission (BNC) which ended in Harare on Tuesday this week show that South African investors are not too keen on committing their money in the country at the moment due to the toxic operating environment and prohibitive financial services sector.
The concerns come at a time President Emmerson Mnangagwa has been trying to sell Zimbabwe as a safe investment destination, but South Africans say Zimbabwe’s unpredictable policies are spooking investors.
The meeting ended with both countries committing themselves to working together to find solutions to their common economic and socio-political challenges.
There will be a reverse BNC meeting in South Africa in October to review the commitments which resulted in the signing of a number of agreements covering various economic sectors.
The agreements were sealed by South African President Cyril Ramaphosa and Mnangagwa in Harare. The three-day summit saw delegates from both countries interacting and exploring solutions to problems that foreign companies were facing in Zimbabwe.
Minutes of the meetings held between South African and Zimbabwean technocrats show the Pretoria delegation clearly indicated that investors in that country are unable to fully exploit business opportunities in Zimbabwe until the operating environment significantly improves.
“The commission recalled the challenges faced by South African investors in Zimbabwe that include land tenure, delayed payments for suppliers and services as well as repatriation of dividends,” read the minutes.
“On the repatriation of funds and payments of imports by South African companies operating in Zimbabwe, the commission noted Zimbabwe’s submission that even though the law provides for 100% repatriation of dividends; some companies have been unable to remit funds due to foreign currency shortages prevailing in the country.”
The failure by businesses to recoup investments is caused by the acute shortages of foreign currency in Zimbabwe.
Concerns over failure by foreign investors to remit dividends have been cited by the Zimbabwe Stock Exchange since 2017, a challenge which was attributed to the shortage of foreign currency.
By June, 2018, the stock exchange recorded an increase in foreign investment of 399% which analysts said was as a result of the dividends that foreign investors failed to remit, hence resorting to re-investing into Zimbabwean companies.
As a measure to improve the ease of doing business, the commission resolved to establish a one-stop investment centre.
The commission welcomes the new reforms aimed at improving the investment climate and facilitating the ease of doing business in Zimbabwe. This includes establishing the one-stop investment centre, the Zimbabwe Investment Development Agency (Zida).
Trade Investment Africa will collaborate with Zida towards mobilisation of investment into Zimbabwe.
South Africa remains Zimbabwe’s biggest trading partner.