GOVERNMENT has signed about 54 Bilateral Investment Protection and Promotion Agreements (Bippas) which are at different stages of compliance with the country’s constitutional requirements as it moves to attract foreign investments, a senior central bank executive has said.
BY TARISAI MANDIZHA
A Bippa is a legal instrument that establishes specific rights and obligations to meet the primary purpose of protecting foreign investments against discriminatory measures like policy inconsistencies by the host state. In principle, it ensures reciprocal encouragement, promotion and protection of investments, thus enabling conditions conducive to increased investment.
Reserve Bank of Zimbabwe (RBZ) deputy governor Kupukile Mlambo told delegates at the Icaz winter school in Dubai recently that government had reiterated its firm commitment to negotiating Bippas with potential investment source countries in a bid to boost investor confidence, thereby attracting the much-needed Foreign Direct Investment (FDI).
“Zimbabwe is a signatory to a number of Bippas with different countries. To date government has signed about 54 Bippas which are at different stages of compliance with the country’s constitutional requirements. 16 Bippas are still under negotiation, three are awaiting signature, 19 are awaiting ratification and nine have already been ratified,” Mlambo said.
Zimbabwe has been trailing regional neighbours in terms of FDI inflows as potential investors cite policy inconsistencies and threats caused by the empowerment legislation. The legislation stipulates that at least 51% of all companies operating in the country should be in the hands of locals.
Last year, Zimbabwe recorded FDI inflows of $545 million, the highest since 2009. Yet the inflows were low compared to South Africa ($5,7 billion), Mozambique ($4,9 billion) and Zambia ($2,4 billion). The Bippas will however not protect farmers from seizure of their farms. Finance minister Patrick Chinamasa last year told Parliament that Bippas would not prevent government from compulsorily acquiring assets, adding the agreement stipulated that compensation had to be paid.
Mlambo said government had opened dialogue with the Netherlands Foreign Trade and Development ministry over outstanding differences on the issue of compensation in respect to Dutch farmers affected by the country’s land reform programme. The farms were protected by Bippas.
Mlambo said government was currently crafting the necessary framework for the creation of Special Economic Zones (SEZs).
“It is envisaged that these enclaves help promote value addition and product beneficiation in line with Zimbabwe Agenda for Sustainable Socio-Economic Transformation [Zim Asset] and Sadc’s industrialisation initiatives,” he said.
The SEZs, Mlambo said, would support growth through the promotion of trade and industrialisation and also assist in improving the attractiveness of a country as a safe destination for FDI.
He said government had targeted industry and Zones for SEZs, of which leather and textiles would be in Bulawayo, chemicals (Lupane), tourism and finance (Victoria Falls), technology hub (Sunway City) and diamond cutting in Harare and Mutare.
