FinanceOpinion

Acid test for new investment agency

President Emmerson Mnangagwa last week signed into law the Zimbabwe Investment and Development Agency Act (ZIDA), a piece of legislation which has harmonised all domestic laws with a bearing on investments in the country.

A toast for this first step towards minimising bureaucratic inertia.

The journey doesn’t end here though.

Zimbabwe is lagging on its regional peers in attracting international capital and that among other factors has slowed down economic growth.

Since taking over from the late former President Robert Mugabe, Mnangagwa has been frantically attempting to convince global capital that Zimbabwe is a safe haven for investors.

The dividends of his efforts are yet to be fully realised.

Looking closely at developments in the country, his aspirations appeared to be in variance with the investment climate that investors experienced in Harare.

The country remains at the tails-end on the World Bank Ease of Doing Business rankings while countries like Rwanda which experienced one of the worst conflicts in mordern history are on the rise.

Ironically Zimbabwe, which at Independence up until the mid-90s was seen as the Jewel of Africa now looks up to Rwanda to model its development strategy.

At Independence, Zimbabwe was probably the second most industrialised country after South Africa.

Now, manufacturing sector output has plunged as local firms struggle against cheaper imports from the region.

Some companies continue to operate using the 1965 Unilateral Declaration of Independence equipment and with breakneck changes in technology, many if not all could be facing an imminent collapse.

This presents a good case on why the southern African nation urgently requires more investment – domestic and foreign.

Sadly though capital is timid when it comes to Zimbabwe.

While ZIDA is one of the key steps in advancing Zimbabwe’s development agenda, overarching issues such as bottlenecks faced by multinational companies in repatriating profits back home cannot be wished away without taking more structural changes.

The unexpected reintroduction of the Zimbabwe dollar last year was not welcomed by the investment world.

In fact that monetary policy has been flagged as one of the glaring examples of policy inconsistency.

Why? In 2018, government adopted a short term economic blueprint—the Transitional Stabilisation Programme (TSP) which will lapse this year.

The TSP has not only become a misnomer as the economy continues to head southwards but it promised the continuation of the multicurrency regime.

Authorities did not live up to the promise and surely that sends the wrong signals.

In trying to make ZIDA, a game-changer, government must put more effort in resolving the emotive land issue particularly the compensation of white former commercial farmers who lost large tracts of land during the agrarian programme.

For a country that wants to project itself as liberal, Zimbabwe has to tick boxes on its commitment to uphold the rule of law as well as respect property rights.

Records show that some farmers who lost land were ‘protected’ by Bilateral Investment Promotion and Protection Agreements but unfortunately in reality that was not the case.

Only when Zimbabwe lives up to its promise to respect domestic as well as international law, will those investors sitting on the fence consider having a dance with Harare.

A Casino-type of economy which former Reserve of Zimbabwe governor Gideon Gono spoke of, cannot take us out of the woods.

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