That venture is commendably intended to be highly facilitative of new investment in general, and foreign investment into Zimbabwe in particular. It is targeted at minimising bureaucracy, and ensuring that all key investment authority requirements are processed within a week, in marked contrast to previous time effluxions of seven or more weeks.Only one facet of the launch of the One-Stop Investment Shop had a sour, and very counterproductive, taste. Yet again political misrepresentation reared its ugly head. Those present were informed that the relative paucity of foreign investment is directly attributable to the “illegal” sanctions imposed on Zimbabwe by many first-world countries. Not only was that contention devoid of substance, but no explanation was given as to how those international restrictions on Zimbabwe are precluding investment. Over and above travel constraints upon approximately two hundred of the political hierarchy, and those connected with that hierarchy, the so-called sanctions only preclude loans and trade with government, its parastatals and other government entities. They, in no manner whatsoever, hinder or ban private sector investment, trade with Zimbabwe, or the provision of funding, in any form to any element of the Zimbabwean economy that is not connected to the government. There was, therefore, no substance whatsoever to the claims that there are sanctions which constrain Zimbabwean investment. Those claims, endlessly repeated, are wholly mythical and devoid of substance.The reality is that potential investors presently perceive Zimbabwe as an extremely high risk investment destination. They are fearful as to security of investment, and as to the endangerment confronting the viability of investments. The fears are founded upon many considerations — all of which must be constructively addressed by government if it had real will to do so. Foremost amongst the investor concerns are:
- The pronounced political instability prevailing in Zimbabwe. Although more than two years have elapsed since the Global Political Agreement (GPA) was finalised between the key political parties, numerous elements of that agreement have not been implemented. As a result, the supposedly “inclusive” government is not functioning as an effective coalition, but is characterised by endless conflict and divide.
- The perceptions of political instability are intensified by the recurrent uncertainty as to when the next presidential and parliamentary elections will be held and, more importantly, whether those elections will be genuinely democratic, free and fair. Already, although election dates are still an uncertainty, rumours abound of militaristic and activist harassment and intimidation of voters in rural areas, and of political favour being cultivated by government support and assistance to those in rural areas being restricted to supporters of the former ruling party, or being given conditionally upon such support.
- Concurrently with investor concerns as to the absence of compatibility between the political environmental and the fundamental needs of investment security, the investors are extremely hesitant to invest in an environment wherein they will have little or no influence on the operations of the entities in which they would invest.
They are unwilling to invest their capital resources, make available exclusive technology skills, accord access to their established markets, and the like, if they have no influence, authority and control of the operations to which they provide those resources and benefits. Almost without exception, the potential investors are unreservedly willing to partner indigenous investors, but not so if the reality is that they are not partners, but subordinates with no effective, lawful role in the control and operation of their investments. However, the government (or, in any event, a key element of that government) is adamant that in any venture having net assets of US$500 000 or more, indigenous investors must possess at least 51% of the venture’s equity. That reduces the intending foreign investor to minority status, subordinate to the will and whims of the indigenous investors. Moreover, the foreign investor is given no assurance that the indigenous “partners” will proportionately and timeously provide equity and other resources to the investment entity. Instead, they are confronted with a declared intent that the entity will be mandatorily obliged to pay levies into an Indigenous Fund which is to assist indigenous investment funding. To all intents and purposes, therefore, the foreign investors are being required, albeit indirectly, to fund their own equity dilution.
- Yet another major investor constraint is the magnitude of the decline in Zimbabwean parastatal and local authority service delivery. With energy generation being erratic in the extreme, impacting very negatively upon productivity and therefore, upon investment viability, and with little evident prospects of transformation in the foreseeable future, potential investors perceive Zimbabwe’s infrastructural near collapse as a major concern in considering whether or not Zimbabwe is an acceptable investment destination. The concern is not limited to the issue of energy availability, but also to reliability of water supplies, efficacy of telecommunications and of transport services, and of much else that should be reliably forthcoming from government, its parastatals, and local authorities.
- As if those diverse considerations do not suffice to negate investor interest, the potential investors are understandably also hesitant to pursue Zimbabwean investment when they perceive intensifying labour unrest, the employer-worker relationships having considerably declined in the last year.
- In addition, investors fear an absence of investment security if their investment is into a country which has consistently disregarded and breached its Bilateral Investment Promotion and Protection Agreements, has unilaterally expropriated land (without compensation), failed to compensate for moveable assets, and for improvements, and crops, situated on the expropriated lands. Those investor reservations are also reinforced by the endlessly declared intentions to increase various direct and indirect taxes on those economic sectors of greatest interest to investors, and by the frequent introduction of excessive regulations and governmental controls.
It is long overdue for Zimbabwe’s politicians to cease their endeavours to deflect recognition of their culpability for the country’s economic morass, and instead to acknowledge that culpability and address it constructively. When that belatedly occurs, vigorously and convincingly, foreign investment will flood into Zimbabwe, for the country’s investment potential is immense. That inflow of investment will be massively stimulatory of the economy, a generator of substantial fiscal inflows, and much else. As a first step, all that is necessary is for certain politicians to recognise, and face up to, the facts!
Eric Bloch
