Zimbabwe has harmonised its investment laws and created the Zimbabwe Investment Development Agency (Zida), a one-stop investment jurisdiction, whose creation is poised to stimulate local and foreign direct investment.
Promulgated in early February, the Zida Act revoked three previous investment legislations: the Zimbabwe Investment Authority Act, the Special Economic Zones Act and the Joint Ventures Act.
Among the most salient provisions of the law, applications for investments must be processed within five working days. The act further gives all foreign investors the latitude to freely repatriate profits and or income to their countries without restriction or delay, in addition to guaranteeing protection of foreign investments against any form of expropriation.
All regulatory agencies will be housed, controlled and supervised by Zida, which will improve the ease of doing business reforms by cutting down the time needed to approve investments so that investors are not moving from pillar to post to get all necessary licences, according to international trade lawyer Petina Gappa.
Economist Persistence Gwanyanya says the establishment of Zida was key to creating a conducive and sustainable investment climate which is a precondition for economic growth.
“Our ease of doing business ranking is very low as a country, and is our competitiveness, hence investments into the country have been very low,” he said. “Presently our investment-to-GDP ratio is less than 5% compared with 30% in the 1990s and no country can generate meaningful economic growth with such a poor ratio.”
Ms Gappa, a former investment advisor in the Mnangagwa government says she is cautiously optimistic about Zida having recommended its establishment but warned the agency could only succeed if it were autonomous.
“It will need to be taken seriously by government actors as the key agency on investment to avoid the current silo approach where policies are disjointed,” she adds. “That is likely to prove difficult as Zimbabwe’s government is notoriously bloated, and there are already some signs that some line ministries are not entirely willing to cede Zida the autonomy it needs.”
Ms Gappa says that investment attraction is a matter of trust and confidence and Zimbabwe will need to work extremely hard to be as attractive to investors as other African countries. Policy headaches around security of land tenure, and the currency situation where investors are not guaranteed the repatriation of profits and dividends have a chilling effect on attracting foreign investment . How government deals with these issues will determine its seriousness to being open for business, she says.
According to the central bank, Zimbabwe attracted $250m in foreign capital in 2019 compared with $717.1m in 2018.