HomeOpinionLocal authorities should consider their economic models to attract investors

Local authorities should consider their economic models to attract investors

Rodney Ndamba…economist

Cities and local authorities are a beacon of any investment destination which reflect the economic opportunities and business environment available for investors.

Many cities in Africa are coming to that realisation, hence developing models for providing world-class services, progressive business environment, and economic opportunities for domestic and foreign investors. The prevailing state of cities in Zimbabwe reflects the economic realities hindering investment attractiveness. The dysfunctionalities in Harare reflects lack of seriousness on by-laws if compared with Kigali (Rwanda), Port Louis (Mauritius), and Casablanca (Morocco). This article provides a critical perspective on how local authorities and cities in Zimbabwe need to take a serious reflection on their role in investment attractiveness which has serious implications for the national economy.

If investors cannot be attracted to Harare, there is no way they can be attracted to the rest of Zimbabwe. Cities can boost economies by positioning themselves as desirable localities for multinational firms’ regional headquarters or sub-offices, thereby becoming important nodes in the firms’ corporate strategies (Wall, 2018).

Contemporary smart cities and local authorities around the world are strategic to national gross domestic product (GDP) contribution in many countries. For example, cities like Zurich (Switzerland), Singapore (Singapore), Munich (Germany), New York (USA), London (UK), Shanghai (China), Tokyo (Japan), Cape Town (South Africa), Johannesburg (South Africa), Frankfurt (Germany), Pretoria (South Africa), Paris (France), Seoul (South Korea) and Dubai (United Arab Emirates) are economic hubs in their own right. They provide conducive and competitive business environments that attract investors around the world. They operate economic models that allow them to be competitive by providing world-class services and infrastructure. While in Zimbabwe cities like Harare and Bulawayo which are supposed to be the beacon of national economy attractiveness have turned themselves into political frontiers.

The cities lack serious economic models evidenced by failing to provide water, modern infrastructure and other services critical for a competitive business environment that attract investors and hosting international businesses.

Many strong economies around the world attribute their economic success to their cities and local authorities that provide efficient services, facilities and infrastructure that attract investors and support businesses for national economic competitiveness. While there may be no accurate data on how much Harare contributes to the national GDP, some cities in Africa provides data on how much they contribute.

According to Acardis (2019)’s Citizen Centric Cities – Sustainable Cities 2018 report, only three African cities featured in the top 100 sustainable cities in the world ranking based on economic, environmental and social health of the cities.

In Africa, only Johannesburg, Nairobi, Cape Town and Cairo featured in the top 100. An analysis of these cities indicates that these are economic hubs with strong models to attract investors by prioritising business environment, managing energy use, pollution and emissions, and quality of opportunities and social life the city offers.

These are cities which are implementing the UN-supported Sustainable Development Goals (SDGs). A publication by UN Habitat (2019) on State of Africa cities 2018 showed Cairo-Egypt (US$13,7 billion), Johannesburg-SA (US$13,2 billion), Tangier-Morocco (US$10,5 billion), Lagos-Nigeria (US$9,2 billion), Casablanca-Morocco (US$8,4 billion), Algiers-Algeria (US$8 billion), Cape Town-SA (US$6,4 billion) and Nairobi-Kenya (US$6 billion) leading in attracting foreign direct investment between 2003-2016 as cities. This reflects this significance of cities to economic growth, national development, and attracting foreign direct investment (FDI) necessary for industrialisation (Adegoke, 2018).

The context of Harare reflects a scenario where the word by-law exist on paper but not in practice. If one drives around Harare which hosts the Zimbabwe Stock Exchange as a capital market and platform for investors, you may struggle to differentiate between rural areas and the city as most of the open serenity which used to be there during the 1980s to 1990s has been turned into maize fields. It is surprising that some of the well-respected maize seed brand companies in Harare naïve to responsible marketing have been on the front providing maize seeds for planting in the wetlands.

Some beautiful places have now been turned into car sales, parking sites, vending zone and squatter camps. Harare, in the current state, cannot be the capital city capable of attracting big investors like Jack Ma and his Alibaba. Imagine Jack Ma walking into First Street as it is. In many capital cities, because they host capital markets, the main street is always orderly and that is where you find the top brands and shops.

Consequently, First Street in the central business district cannot compete with Sam Levy’s and Arundel Village on hosting top brands and shops due to the lost glory.

It is a fact that Harare has been struggling to provide water, other services and infrastructure due to poor planning, strategic long-term thinking and leadership. Most street lights and robots are not working. The solar street lighting project along Samora Machel East Road has been abandoned while rusty lights on Enterprise Road appear like scrap metal and danger to drive along the road. For sure, if the City cannot afford to buy a few litres of paint for these poles, how can they convince foreign investors? It is evident that Harare cannot be the beacon of investment attraction of Zimbabwe unless there is a serious shift with tangible results.

Many businesses have been relocating from the CBD to low density houses for offices due to the quality of the CBD. It is evident that Harare has lost it when it comes to providing a competitive investment destination. The model of the city of collecting household rates and levies from residence and businesses is a traditional model when compared to models of Tshwane, Kigali and Port Louis.

Across the border in South Africa, the City of Tshwane operates a sustainable model. The city offers transport services by operating a bus company and office parks in addition to traditional housing and refuse services. The city owns eco-friendly office parks which allows continued sustainable incomes in the future. Unlike Harare, most of the land which is its biggest asset which could be used to construct business and industrial parks is being parcelled out for housing stands in a city with high unemployment. Once sold, the council cannot receive optimum revenue in the future.

Harare should consider building office parks, flats, shopping malls and starting a bus company. The city should consider partnerships with pension funds and investors. Such models will guarantee future revenues which can hedge residence rates and levies to affordable levels unlike the current situation where residents evade payment they cannot afford.

In conclusion, if cities in Zimbabwe are to become meaningful investment destinations, they should consider their model and service delivery. It is clear evidence that many cities lack competitive models hence putting the pressure on government.

In the current context, to think of Harare being a ‘world-class city by 2025’, it appears unrealistic unless there is a serious turnaround different from the past. The biggest casualty of current local authorities and cities economic models are the private sector and national economy. These days investors consider the city’s infrastructure, water, electricity, waste management and social being before committing investments.

Therefore, it is upon cities in Zimbabwe to start taking serious consideration of their strategic role in attracting foreign direct investment for the country.
Ndamba is an academic and founder of the Institute for Sustainability Africa, an independent think-tank and research institute based in Harare.

This article is part of the New Perspectives series which is co-ordinated by Lovemore Kadenge, immediate past-president of the Zimbabwe Economics Society — kadenge.zes@gmail.com and mobile: +263 772 382 852.

Recent Posts

Stories you will enjoy

Recommended reading