The Sunday Mail
Itai Mazire and Kuda Bwititi
The Reserve Bank of Zimbabwe (RBZ) has launched a hunt for an anonymous Zimbabwean investor who is at an advanced stage of setting up a US$500 million ethanol plant in Zambia without the requisite approval. Under Zimbabwe’s foreign investment regulations, locals are allowed to invest in foreign countries provided such investments have been cleared by the Exchange Control whose role is to facilitate the implementation of such transactions.
The case against the anonymous investor comes in the wake of a recent announcement by Zambia’s Permanent Secretary for Luapula Province, Mr Chanda Kasolo, that a Zimbabwean investor was on the verge of sealing a US$500 million deal for an ethanol production plant in the Luena Farm Block in Kawambwa.
Mr Kasolo was quoted in the Zambian Daily Mail last month as saying he was lobbying his country’s Mines, Energy and Water Development Ministry to issue a Statutory Instrument (SI) to authorise the mandatory blending of ethanol with petrol.
“The sugar plantation at the 110 000-hectare Luena Farm Block has the potential to create 5 000 (jobs) once it starts operating.
“I am very interested in the jobs that this project will create, but I am looking beyond the sugar plantation. There is a Zimbabwean investor who would like to invest in the sugar plantation and venture into the production of ethanol, which is a biofuel.
“The Zimbabwean investor is waiting for the SI to allow the blending of ethanol with petrol and to install blending equipment at filling stations,” Mr Kasolo said.
Responding to questions from The Sunday Mail, the RBZ said the investor is yet to seek authority from the Central Bank, despite having initiated talks with Zambian authorities.
“The RBZ’s Exchange Control Division, which is responsible for approving cross-border investments by local investors, has not yet received any request from a local investor wishing to invest in an ethanol project in Zambia.”
The Central Bank said the National Economic Conduct Inspectorate (NECI) is charged with identifying locals who invest outside the country without following laid-down procedures.
“Local investors who invest outside the country without prior exchange control approval are in violation of existing regulations governing investments into other jurisdictions.
“To this end, all cross-border investments undertaken by local investors without Exchange Control approval are referred to the National Economic Conduct Inspectorate (NECI) for investigations and possible prosecution,” wrote the RBZ.
An official of the NECI told The Sunday Mail that the inspectorate is awaiting instruction from the RBZ to launch investigations into the deal.
“If the Zambian deal was not approved by the Exchange Control Division, then there is need for the relevant authorities to quickly move in and carry out a probe.
“It is key for us to know the source of the funds that are being pumped into the cross-border investment considering that a local is involved. We await the authorisation from the Central Bank before we carry out any investigations. In an event like this, the probe will be carried out locally and in Zambia.”
The RBZ asserted that cross-border investments should be monitored because they help boost the country’s liquidity.
A monitoring mechanism is already in place to follow up approved offshore investments to track their performance.
“The country recognises the potential growth and expansion associated with the establishment of such offshore investments. These investments are supposed to be of benefit to the national economy through employment creation, opening of new markets, foreign exchange generation through the increased inflow of profits, dividends and other incomes accruing into domestic market. This has a bearing on our liquidity.
“The Central Bank’s role is to ensure that such investments are undertaken successfully and ultimately, become beneficial to both the company and the country. Once the regulatory requirements for the establishment of such a cross-border investment have been granted, the RBZ through its Exchange Control, adopts a monitoring and follow up mechanism that tracks the performance of the investment abroad.
“The monitoring mechanism can both be on-site and off-site.”
