THE Zimbabwe Investment and Development Agency (Zida) Bill was gazetted on April 5 2019. The purpose of the Bill is to establish a single focal point that facilitates entry and implementation of investment projects in Zimbabwe, as well as to co-ordinate investment programmes and strategies.
The Bill also institutes a one stop-shop investment centre which shall have representatives of local entities that play key roles in the licensing, establishment and operationalisation of investments. These entities include the Companies Registry, Zimbabwe Revenue Authority, Environmental Management Agency, Reserve Bank, National Social Security Authority, Zimbabwe Energy regulatory Authority, Zimbabwe Tourism Authority, State Enterprises Restructuring Agency and specialised investment units for line ministries such as Mines, Local Government, Tourism, Industry and Agriculture. Zida will streamline and take over the functions of the Zimbabwe Investment Authority (ZIA), the Special Economic Zones Authority and the Joint Venture Unit.
The Bill is imperative to Zimbabwe’s investment prospects and the improvement of the local business climate.
Zimbabwe has been struggling to attract investment (both local and foreign) in the past 10 years. The country had investment commitments worth more than US$20 billion in 2017 and 2018 but foreign direct investment inflows could not eclipse US$349 million and US$745 million respectively. Part of the reason why Zimbabwe is failing to attract investment is the bureaucracy in various government departments or state entities responsible for licensing and approving investment enquiries. Red tape in licensing worsens the country’s ease of doing business which is already dismal. Zimbabwe is ranked 155 out of 190 economies in the ease of doing business, according to the World Bank’s latest annual ratings.
Despite the crippling power cuts Zimbabwe is facing, government bureaucracy is stalling the implementation of a US$400 million tri-solar plants deal between Guarantee Risk Solar Energy and South African power giant Exess Africa. The project seeks to establish solar projects with the potential to deliver more than 250 megawatts in Goromonzi, Harare and Bulawayo in conjunction with the respective city councils. Earlier this year, the government blocked a proposal by South African-based company Mining, Oil and Gas Services (MOGS) to construct a 550km fuel pipeline from Beira to Harare worth US$1 billion. The pipeline would have been the second of its kind in the country. However, the government argued that the sector is oversubscribed and has no space for new players.
Similarly, the investment of more than US$400 million into the National Railways of Zimbabwe (NRZ) by the Diaspora Infrastructure Development Group consortium and Transnet is also being sabotaged by red tape in government despite firm guarantees from South African financiers to bankroll the deal. After being snubbed by the government, a local company, Astro Mobile has been licensed to setup a $100 million manufacturing plant in Zambia while Zimbabwe continues to import foreign-manufactured handsets.
Another investment, potentially worth US$1 billion, into Caps Pharmaceuticals by Indian giant Ajanta Pharma, has hung in the balance due to unspecified reasons since April 2018. Kwesé Media also faced the hurdles in its quest to getting full-spectrum terrestrial licences and eventually set up regional offices in Mauritius, Namibia and South Africa despite Zimbabweans importing entertainment content worth over US$120 million per year from Multichoice South Africa. Kwesé Media now has broadcasting licences in more than 20 African countries.
There are numerous investment deals worth billions of dollars into telecoms, broadcasting, tobacco processing, pharmaceuticals, manufacturing, mining, energy generation, public works, construction, roads and infrastructure development that were never implemented due to red tape and politics in government. This trend will continue as long as investments into Zimbabwe are determined by short-term, individual or political motives despite their potential impact to economic growth.
To fully utilise Zida and break with past mistakes, there is need for:
Once fully operationalized, Zida should assume independence on licensing and approving investments in the country.
It should also have full authority to ink investment deals that mirror the country’s long-term vision in growing the economy. This vision should not be left to ministerial office bearers or political ideology of the day at the expense of the country’s development. International and regional investment agencies such as the Rwanda Development Board (where the Zida concept was derived from), InvestSA, Botswana Trade & Investment Centre, Namibia Investment Centre and Singapore’s Economic Development Board have full autonomy to approve investment deals into their countries and facilitate timeous implementation by line ministries. That way, Zida can carry the nation’s investment agenda into the future.
Meritocracy on board appointments
To cure the political interference disease that has soiled various investment proposals into the country, the Zida board of directors should be appointed through public interviews called by parliament. Names should be nominated for prospective board members based on merit, exposure to investment or project financing and must strike a balance between age and relevant skills from various economic sectors in Zimbabwe. A clean break with cronyism and political appointments that lack merit in parastatals boards is key to the growth of investments in the economy.
Benchmarking with regional peers
Foreign investment is shy as it looks for markets where return on capital is maximised, secure and guaranteed. It is not a coincidence that countries which offer policy consistency, economic stability and investment incentives in Africa tend to be those nations that receive more investments before other factors such as market size are factored in. Zida should therefore be agile and consistently benchmark with Southern African Development Community (SADC) peers in offering investment incentives, especially to investors that express interest in minerals and agricultural value addition, export-oriented manufacturing from Zimbabwe and strategic infrastructure developments. That way, Zimbabwe competes for investment with other SADC countries instead of begging foreign investors or rolling out the red carpet for shady investors who have been blacklisted in other countries.
Provision of key economic data
Key economic data such as the value of mineral deposits, exports and periodic performance reports for key sectors such as output from manufacturing, mining, agriculture, tourism, energy and financial markets should be readily accessible for prospective investors on the Zida website. Qualified information should be available without an investor physically visiting Zida offices. The agency should be funded to subcontract or enlist for such information for the benefit of economic development.
The Zimbabwe Investment and Development Agency Bill has potential to improve the ease of doing business if fully implemented, however there is need to move away from the daily political bickering and cronyism in government appointments by ensuring Zida autonomy. Zimbabwe is failing to capitalise on various investment enquiries due to red tape and corruption in the awarding of investment licences. Various foreign investors have reported a number of bribe proposals by senior government officials so as to get operating licences in the local market.
There is need to move away from entrusting the country’s investment future in the hands of individuals who champion short-term causes at the expense of long-term economic development. Furthermore, investors need information on economic sectoral performance in Zimbabwe and there can never be an agency better qualified in dispensing investment data in Zimbabwe than Zida.
Victor Bhoroma is an economic analyst. He is a marketer by profession and holds an MBA from the University of Zimbabwe. E-mail: email@example.com or alternatively follow him on Twitter: @VictorBhoroma1.