ZIMBABWE will not violate bilateral agreements, and take over foreign-owned companies, a minister has said.
Speaking at the Zimbabwe trade and investment forum organised by Mail & Guardian Africa last Friday in Johannesburg, minister of Industry and Commerce, Mike Bimha, said; “[Zimbabwe] will not invade foreign-owned companies and violate bilateral agreements it signed with South Africa and other friendly countries doing business in the country.”
A houseful of potential investors, mainly from the mining sector, attended the event.
Bimha dismissed reports by international media suggesting Zimbabwe was “grabbing” 51% ownership of foreign-owned companies in order to empower indigenous Zimbabweans.
His sentiments follow as Zimbabwe struggles to shake off criticism and negative publicity following the country’s policies to reclaim or nationalise sectors of the economy controlled mainly by white entrepreneurs.
This dates back to about ten years ago when Harare, controversially, seized arable and game land held by minority white Zimbabweans, arguing they were “stolen” in land grabs during the colonial period.
The government argues that its indigenisation policies are aimed at reversing imbalances which resulted from those decades of colonialism.
The laws require foreign-owned entities operating in the country to cede a major stake to indigenous Zimbabweans.
Despite mixed reactions, a number of companies in various sectors, such as mining, financials and retail have complied. They are probably alert to the fact that in other countries, shrewd companies have actually put these indigenisation laws to profitable use to buy themselves local immunities.
“There have been a lot of myths, especially on the indigenisation policy with different interpretations being made and sending the wrong signal to the investors,” Bimha said.
Signed into law in 2008, the Indigenisation and Economic Empowerment Bill defines an indigenous Zimbabwean as any person who before independence from Britain in 1980 was disadvantaged and discriminated against on the grounds of their race.
The timeframe within which such disposal takes place differs from sector to sector.
“It is critical to state that the 51% ownership enshrined in the Indigenisation and Economic Empowerment Act applies only to fine products like minerals,” Bimha explained.
Bimha thus assured South African companies wishing to go to Zimbabwe to do business that their investments “would not be touched” since the two neighbouring Southern African nations have bilateral agreements.
He said the 51% share ownership quota to be ceded to indigenous Zimbabweans was always negotiable as per a “case-by-case basis.”
Zimbabwe has in recent months pushed hard to lure investors in its northern neighbour to channel investments to revive its economy.
The minister urged investors to make the most of the Zimbabwe Agenda for Sustainable Socio-Economic Transformation (ZimAsset), the country’s economic blueprint aimed at resuscitating the economy after years in a quagmire.
The plan is targeting average growth of 7.2% per year, and to take it into double digit growth after the next three years.
The economic slump of recent years has seen rising unemployment and poverty and the demise of the local currency, the Zimbabwe dollar.
The issue of mineral beneficiation by Zimbabwe has been further adopted by the African Union (AU), which is now urging its member states to add value to their minerals in order to create jobs for their respective countries.
“ZimAsset identified Foreign Direct Invest (FDI) as a critical enabler for economic growth and raising industrial capacity of the country.
“Zimbabwe urgently requires significant amount of foreign direct investment to create employment and enhance technological advancement to improve productivity and beneficiate her raw materials”, said Bimha.
He said various investment opportunities were readily available in the areas of agriculture, tourism, mining, infrastructure development, paper and plastic, food processing, clothing and textile, leather and footwear, fertiliser and chemical, pharmaceutical and motor industries.
Finance and lack of technology
“The manufacturing sector has been affected by long term finance and lack of technology. Investment is therefore sought to resuscitate the existing industry as well as having new players open new facilities”, Bimha said.
He said in the area of infrastructure, the government was looking at investors interested in constructing new rail network, roads, bridges, airports, hospitals and clinics, factory shells, industrial parks, and residential and commercial properties.
He revealed that the capital Harare had acquired a huge $50 million (about rand 512 million) for the establishment of a new modern hospital.
“The Information Communication Technology (ICT) is doing well in Zimbabwe, underpinned by substantial investment in network infrastructure including the expansion of broadband and fibre network.
“Data and internet network companies however need to invest more in ICT,” he said.
He however noted that FDI into the Southern African country remained subdued as it was perceived by developed nations as “economically risky.”
Bimha pointed out that in the current year, FDI was projected to increase by about 70% to $591 million on the back of some measure of economic improvements he attributed to “re-engagement” with influential countries that had previously shunned Zimbabwe.
In recent times, the United States, the European Union bloc and other western countries have been working on normalising ties with Zimbabwe after years of frosty relations.
He said in order to rebuild confidence with the international community including potential investors, Zimbabwe would continue crafting laws that were business-friendly.
Among other things, Zimbabwe was going to make ensure that investors were free to repatriate 49% of their income out of the country if they wished to, Bimha said.
“Zimbabwe will continue to review legal framework in order to attract foreign direct investment in the country. The government has signed some Bilateral Investment Promotion and Protection Agreements (BIPPAs) with some countries,” he said.
Signed mostly with countries on the continent, 16 of the BIPPAs are still under negotiation, three await signatures, more than 20 await ratification, and nine have been ratified.