The Sunday Mail
When commissioning the long-desired platinum smelting plant at Unki Mines near Shurugwi last week, President Emmerson Mnangagwa took the opportunity to encourage and reassure investors and potential investors that Zimbabwe understood their needs and welcomed their partnership.
The smelter itself was a good example of desirable investment, as the President made clear when he thanked Anglo American for going ahead with the $62 million project. Zimbabwe wants more and more of its primary exports to be processed inside the country before being shipped and for most metals this means being exported as ingots rather than as ores or concentrates. After all global trade in these metals is in ingots and this preliminary processing is simply putting the export into the form that the end buyer wants and expects.
We already do this with gold and the other member of the big three, tobacco, undergoes quite a lot of processing by Zimbabwean companies before the cleaned, deribbed and carefully graded leaf is shipped to cigarette makers around the world.
By doing processing within Zimbabwe the country benefits from job-creation and from the higher value of a processed product, so enhancing export earnings. So this needs to be encouraged.
The Government still needs to be sensitive when pushing for more internal processing, but generally speaking by ensuring that it is cheaper to process within Zimbabwe than outside plus incentives for required capital investment will do the trick, producing a result that benefits the country as well as the investor. When everyone wins there is usually little trouble in extending the investment to processing.
The other area where the President felt reassurance to investors was required was with the Indigenisation and Economic Empowerment Act, which he acknowledged had scared away investment and whose effects have already been sharply modified by administrative interpretation and amendment. He spoke of further amendments that would remove any remaining significant discouragement of investment, coupled with other legal changes to encourage and stimulate investment.
The Act was introduced to overcome what was seen then a significant problem. Demographic changes, time, a whole lot of development and needless losses of investment have reduced that. The President basically promised to bring into the law all the changes already made and remove impediments such as shareholding restrictions that add little value but have imposed a large cost.
It is still desirable to increase Zimbabwean investment in production and to have good relations between investors and their local communities, but that can be addressed in other ways, and can be addressed using incentives rather than bans. Carrots usually work far better than sticks. Once again we are looking for win-win, not a winner and a loser.
In any case, when we take Unki Mines, the investor might well be Anglo American but the staff from top management down are Zimbabweans and the nation not only benefits from the wide range of jobs and economic activity, which for a mine includes housing, education and health services, but also from tax revenues and export earnings.
The pluses are so many that making it easier for Unki to expand and others to climb in makes excellent sense.
Much of what remains in the Indigenisation Act after the next raft of amendments, which we stress are only converting present practice into law, is what most countries include in their immigration law. Basically the Act reserves a range of smaller businesses for Zimbabwean citizens, with a grandfather clause exempting existing business owners. The Government might well consider following the practice in many other jurisdictions and move the parts of the Act it wishes to keep into more appropriate sections of the law.
No country allows foreigners landing at their airports with a hairdryer residence permits as a hairdresser and Zimbabwe does not need to have special Acts to do the same; an upgraded Immigration Act would achieve the same end without scaring real investors.
At the same time the need to help Zimbabwean citizens become more economically active and investing more themselves can be addressed through new legislation focusing on this issue and building a package of incentives and other aid that provides serious help.
One major effect of the present Government’s determination to make Zimbabwe more business friendly and to make opening businesses far easier is that most beneficiaries will in fact be Zimbabweans. By looking at it in this light it is easy to see where special extra work is needed to allow our own people easy entry into the business world. All businesses start small and do not need to spend thousands of dollars to open.
The pressure on making it easy to do business needs to extend right down the line, from the big investor to the school-leaver setting out.