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‘Govt must create friendly climate for investment’

A FORTNIGHT ago, the Zimbabwe Japan Friendship Association (Zijafa) held its inaugural annual general meeting in Harare, with its chairperson outlining the objectives of the entity. Zimbabwe Independent senior reporter Tinashe Kairiza (TK) spoke to Zijafa chairperson Sifelani Jabangwe (SJ), who is also the Confederation of Zimbabwe Industries immediate past president. Jabangwe underscored that Zimbabwe can only attract foreign direct investment (FDI) if government cultivates an investor-friendly climate, anchored on a stable exchange rate and policy consistency. Below are excerpts:

TK: When was Zijafa formed and for what reasons?

SJ: This is actually the inaugural annual general meeting for Zijafa and we finalised the registration and formulation of the constitution around November 2019. Zijafa was formed in order to promote relations between Zimbabwe and Japan. It is an idea that was started by his Excellency, the Ambassador of Japan to Zimbabwe Toshiyuki Iwado.

The purpose stemmed from the potential that we saw by developing relations between Japan and Zimbabwe. Right now there are a few Japanese companies operating in Zimbabwe which essentially are less than five.

Yet in South Africa there are 125 companies operating in that country. So, we saw that in the past, there was a lot of technology which was being used from Japan. So we realised that with Japan being the world’s third-largest economy, it made sense for us to develop relations with the Asian country.

TK: What opportunities are available for Zimbabwean firms in Japan?

SJ: As you are aware, Japan is a country which is very much technologically driven. If you look at some of the big brands that used to be there, which are still there, like Fuji, Sony, Hitachi and Honda you get to understand how big their economy is. So we can have trade in spare parts. Ultimately we would want to attract those companies to invest in Zimbabwe and distribute to the rest of Africa from Zimbabwe. We share a lot of commonalities with Japan relating to culture and we believe that relationships start with people, and from there on we can nurture investment.

Other areas of cooperation include culture, academia and trade. As they say, if you cannot run fast, get on the back of someone who runs fast, then you will equally be fast. So we are looking at areas on the strength of Japan as the world’s third-largest economy we can leverage on, bearing in mind that Africa is the next growth frontier. So in that context, we are at the forefront of courting Japanese investors. We believe that Zimbabwe can be a favourable investment destination for Japan.

TK: Let us look at the Zimbabwean investment climate which many investors have generally described as hostile. How easy was it for you to convince the Japanese to form Zijafa?

SJ: I think one of the challenges investors face is to access information about Zimbabwe. On our part, we engaged a prominent lawyer to help us deal with that challenge. We were then given guidance on how to do it. I must submit to you that we really did not encounter many challenges in setting up Zijafa.

TK: Do you think Zijafa is an idea that can excite Japanese investors?

SJ: Indeed, what happens is that we as Zijafa are looking at becoming the first port of call for Japanese investors looking to do business in Zimbabwe. If we do not have a port of call and someone to handle all investment enquiries, it would be difficult for investors to set base in Zimbabwe. But now that Zijafa is there, investors know where to find investment information relating to Zimbabwe and Japan. The association will help investors navigate the information deficit on Zimbabwe as an investment destination.

Zijafa is linked to major business associations, so we can also link Japanese investors to synergies which already exist. As the private sector, we can take investors to government. Zijafa will help investors navigate areas where they may have been facing hindrances.

TK: Let’s talk about trade, Zimbabwe suffers a trade deficit with most of its trading partners. Can you briefly share with us the trading trends between Japan and Zimbabwe?

SJ: I do not have figures with me here, but currently trade is down.

TK: What are the opportunities available to boost trade between the two countries?

SJ: As you know, Japan is one of the biggest iron ore processors. So if we want to export iron ore, Japan is the place to go. Japan imports a lot of food because it is not a very arable country. So Zijafa gives us an opportunity to export to Japan. There is also an opportunity, for instance, to export our cultural products to Japan. For example, our mbira instrument is now being used for meditation purposes in Japan. The major opportunity is, however, for us to lure Japanese investors who can add value to our abundant minerals rather than for us to export raw materials. Japan has the technology to do that.

If we can add value to some of our minerals locally, this will create value for Zimbabwe and the investors. What we want is to have technology transfer. Right now we do not have anyone manufacturing televisions, I think we only have two companies which manufacture mobile phones at a small scale. So the electronics sector is an area where we can employ a lot of our young people, and we can leverage on the sector to attract Japanese investors. I believe that this extends to motor spare parts like spark plugs, oil filters and air filters. These are parts which can easily be manufactured locally.

TK: The association is now in existence, is there appetite among Japanese firms to form partnerships with local companies?

SJ: Certainly, we have had visits from Japanese companies which are currently based in South Africa. They also want to have a footprint in Zimbabwe. The Japanese ambassador has informed us that we must start by creating people-to-people relations as I have highlighted before. Japan manufacturers technology which is used in electronics, particularly as it relates to the mining sector. There are companies which are in the construction sector which can benefit from Japanese technology. This will be ideal now at a time Zimbabwe is looking for investment in infrastructure. Obviously, for us to attract this investment we would need a stable local investment environment.

TK: Let’s talk about how Japanese firms are performing in Zimbabwe. Would you say they are making any meaningful returns?

SJ: The investment environment has certainly been tricky for everyone but there is one company in the paint sector, and another one in the motor trade and servicing industry. Those companies have actually been doing well. The challenge has been the shortage of foreign currency which has restricted them from scaling up their operations. But obviously they are not happy with the inflation that we are experiencing which is eroding the value of their earnings. But when you look at the motoring industry and the amount of vehicles they are servicing you will be impressed. It is a fantastic sight.

They are saying if the economy is more stable, there will be room to make more money. We have companies, particularly in South Africa, which are trading in medical diagnostics equipment. They are selling their gadgets here. They are finding Zimbabwe to be a fairly good market.

TK: A number of businesses have complained about government’s inconsistencies in terms of rolling out policies. What do Japanese firms feel about that?
SJ: Policy inconsistencies will scuttle any plans to bring investment into the country. We are going to do our part in terms of bringing investors here. But we also expect government to do its part in terms of putting in place a business-friendly environment. Government is saying it is going to do that. We have the Transitional Stabilisation Programme (TSP) which is hinged around stabilising the macro-economic environment.

Noone will invest in an unfriendly environment, not even locals. If investors come here and they find out that we are not consistent in terms of policies, then they will leave. We have seen a more stable exchange rate, but it is not at the scale we were experiencing last year. So if government can put in place stable policies and deliver on that, then the opportunities which are available will attract investors.

TK: I understand that in October, Zijafa will participate in a manufacturing investment summit in Japan. What is the purpose of that conference?
SJ: The conference is purely for Zimbabwean companies to open their eyes on the technologies available in Japan. Every October they hold a manufacturing conference in Japan, one of the key issues they will be exhibiting is the use of artificial technology in manufacturing. They will also be showcasing manufacturing technologies and this will be an opportunity for Zimbabwean firms to tap into that. It will help Zimbabwean firms in two ways. One will be technological transfer, most companies need to retool.

If Zimbabwean industries have to develop, we need to see how the best in the world are doing it. Industry cannot develop if we ignore the cutting edge technologies that other countries are embracing. Secondly, we are attending this conference to boost our capacities.

TK: What opportunities are there for Zimbabwean companies in Japan?

SJ: The major opportunities available in Japan are mainly in the food sector. At the moment, in terms of manufacturing we are not doing much. The area we have developed is in food processing. I foresee an opportunity where we have to identify what Japan imports and we have to sit down and come up with ways of bridging that gap. This is a study that we are going to do. We want to understand what Japan is importing and how we can satisfy that need. They import ferrochrome; we want to be suppliers of ferrochrome to them.

The most important thing is that they are a huge economy; they import tonnes of ferrochrome so it is up to us to use that as an opportunity for our own growth. It is for us to explore opportunities for growth in Japan. For now, what is exciting is that for a third world country to be partnering with the world’s third-largest economy there will be immense opportunities for Zimbabwe.

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