A DEAL that would have seen a total US$2 million in foreign investment being injected into the country’s agricultural sector has been put on ice after government introduced various legal instruments and embarked on prolonged power cuts, businessdigest has learnt.
This comes after government, through Statutory Instrument 142 of 2019, phased out the multi-currency regime and made the Zimbabwe dollar the country’s sole legal tender and promulgated Statutory Instrument 145 banning individuals from trading and transporting maize.
The legal instrument also gave the state-run Grain Marketing Board the monopoly to buy maize.
Business consultant and facilitator of the investment deal, Simon Kayereka, told businessdigest this week the two policy instruments along with the daily 18-hour power cuts have given the Dutch investor cold feet.
“As a consultant, we are always looking for new business and to this end we had secured a Dutch company, which I cannot name as of now, to invest US$2 million in a milling plant which would have created more than 50 direct jobs, as well as numerous jobs downstream, particularly in the transport and retail sectors,” Kayereka said.
“The plant was going to be located about 40 kilometres from Harare on a farm. This is one of those farms which were bought under what was then called Africa Purchase Areas. However, we were caught with three surprises during a very short space of time. The Dutch investors have now advised us that the project should be put on hold.”
Kayereka said because of the two policy instruments, the investor feared that they would not be able to repatriate some of their dividends. They also cited concern around the viability of importing inputs in the current environment.
He said the Dutch investor also expressed concern over the dispute around the legal instruments given that both are being contested in court.
Philanthropist and Harare North MDC MP Allan Markham and Murewa farmer Clever Rambanepasi argue Statutory Instrument 145 allows Zimbabwe Republic Police officers to seize maize grain suspected of being moved without authorization. They say compliance with the law creates a dangerous monopoly. They argue that the restrictive regulations affect the contractual right of farmers of buying grain from any party or individual which would have a serious effect on livelihoods. Businessman and lawyer Tawanda Nyambirai has challenged Statutory Instrument 142 in court.
Kayereka said the power outages, which have significantly increased production costs and put a number of companies on the brink of closure, only worsened the uncertainty for the investor.
“When the power shortage came in, it was the last straw. I tried to persuade them about the temporary nature of the power cuts but could not give them an assurance as to when they will come to an end,” Kayereka revealed.
He warned that the bottlenecks frustrating investors were just a microcosm of the worsening economic environment hampering investment.