The Sunday Mail
. . . President’s Office steps in to grow FDI
Africa Moyo —
GOVERNMENT departments and agencies whose mandate is to lure foreign direct investment are fretting over one key statistic: of the US$12,6 billion worth of investment proposals approved between 2011 and 2015, only investments valued at US$2,1 billion have taken off.
Policymakers say efforts to improve the business environment have to be redoubled to clear the path for potential investors. Figures from the Zimbabwe Investment Authority, a statutory body mandated to attract domestic and foreign investment, show that in 2011 the country approved investments worth US$6,6 billion but realised only US$387 million in actual business.
In 2012, the project approvals fell to US$930 million, and US$400 million translated into actual investment. Proposals dropped further to US$686 million in 2013, of which US$400 million was realised.
Proposals topped US$1,1 billion in 2014, but there has only been movement in projects worth half the value. It was the same last year when ZIA approved investments worth US$3,2 billion — excluding the US$3 billion proposed investments by Nigerian billionaire Mr Aliko Dangote. Actual investments did not exceed US$421 million.
Between January and August 2016, approvals fell to US$452 million. Though FDI has underperformed across Africa in line with slowing global economic growth, inflows into Zimbabwe are relatively underwhelming.
According to the United Nations Conference on Trade and Development 2016 World Investment Report, Zimbabwe’s FDI at US$421 million in 2015 was lower than investments in Mozambique and Zambia, which stood at US$3,7 billion and US$1,6 billion respectively.
ZIA chief executive officer Mr Richard Mubaiwa told a stakeholders’ workshop on image building in Harare last week that Zimbabwe’s perceived risk premium, fanned by graft and economic instability, was not helping the country’s investment attractiveness.
Principal Director for Macro-Economic Planning and Investment Promotion, Brigadier-General Thando Madzvamuse told The Sunday Mail Business last week that while investors were “keen to invest in Zimbabwe”, they were frustrated by unpredictable policies and the obtaining business environment.
“They come in droves seeking investment opportunities, but most of them eventually do not set up their businesses. Generally, the macro-economic environment is not good and the perception of the country by investors is also not good, hence the low actual inflows.
“Zimbabwe has got to change things; the way we do business has to change. Some of our laws such as the Indigenisation and Economic Empowerment Act are turning away investors owing to a wrong or distorted interpretation of the law and I am sure you will remember that His Excellency, President Mugabe, has already said the law is being interpreted wrongly, but despite his pronouncements, the issues he raised are yet to be formally attended to, meaning that, technically, we are still on square one,” said Brig-Gen Madzvamuse.
In April this year, President Mugabe clarified confusion surrounding the Indigenisation and Economic Empowerment Act in a development that put paid to efforts by some arms of Government that were threatening businesses with closure for non-compliance.
However, the relevant amendments to the Indigenisation and Economic Empowerment Act have not been enacted as yet. Brig-Gen Madzvamuse also blamed the mismatch between investment approvals and actual FDI flows to “political bickering and the demonstrations” that recently took place in the country, which caused investors to adopt a wait-and-see attitude.
“My personal feeling is that we have to change the way we do business. There is a painful mismatch between investment approvals and actual flows, which shows clearly the fact that investors are interested in investing here but want some things to change,” added Brig-Gen Madzvamuse.
In the State of the Nation Address in August 2015, President Mugabe said Zimbabwe needed to improve the way it conducts business to attract investment.
He subsequently pronounced the Ten-Point Plan for Economic Growth to increase production and improve the business environment. The Office of the President and Cabinet — charged with the responsibility of improving the doing business reforms — is seized with overhauling the Companies Act among other interventions designed to make it convenient for domestic and international investors to do business.
So far, the Companies Bill has been drafted while laws like the Shop Licensing Act have also been amended. It now takes less than five days to register a company, down from 30 days.
In Rwanda, it takes 24 hours to register a company. Government is also pushing for a “robust legislative framework” to establish a One-Stop-Shop Investment Centre (Ossic) that streamlines processes and procedures.
Processes related to tax registration and municipal licensing are being reviewed. Online licensing of companies has already been achieved for name search and tax registration, and is expected to be rolled out to other areas.
The Investment Promotion Ministry is overseeing operationalisation of Ossic, and staff deployments are underway. Said Brig-Gen Madzvamuse: “The officers have started reporting for duty at ZIA as we await the promulgation of the ZIA Amendment Act, which, among other things, will provide for the legislative support for the OSS (One-Stop-Shop). All the parties to the Ossic are co-operating to make the OSS truly operational.
“All the same, the conclusion of the ZIA Act Amendment, which is in progress, will put up the legal framework under which the OSS will operate.”
Government is compiling an Investment Handbook, which will be a compendium of all investment information.