Zim economic recovery an uphill task

Thursday the 18th of December 2020 saw the launch of the Zimbabwe Investment and Development Agency (ZIDA) in Harare. It is lauded as the one-stop shop for investors who are answering to the call that “Zimbabwe open for business”, a tag line made famous by President Emmerson Mnangagwa, ever since he took over from the late Robert Mugabe through a coup code-named “Operation Restore Legacy” with the assistance of the army in 2017. Zimbabwe, under Robert Mugabe, had been operating under a sovereignty frame to ward off international criticism and in some instances leaning hard on nativism to muscle its way, especially as regards the land reform programme of 2000.

BY CONELIA MABASA

Prior to ZIDA, the home of investment was the Zimbabwe Investment Authority (ZIA) on 109 Rotten Row, Harare, working with other bodies which are responsible for different sectors and their respective regulatory frameworks. For example, if an investor was interested in energy, ZIA would advise and then redirect them to the Zimbabwe Energy Regulatory Authority (ZERA) for the regulatory framework; if it was infrastructure, the potential investor would have to visit the Infrastructure Development Bank of Zimbabwe, and then ZIMRA for the taxes, among other government departments. It seemed like a burden for the investors to piece together the information and register with different entities before they could be operational.

The launch, however, is not an isolated event, but a culmination of about two years of work behind the scenes. In early 2018, the president and his entourage were in Rwanda for the signing of the Continental Free Trade Area in Kigali and they were surprised at how their hosts had been able to attract foreign direct investment and lead recovery efforts in a short space of time since the genocide. The genocide in 1994 destroyed virtually everything and about
800 000 lives were needlessly lost.
Seventy percent of the population at the end of the war were women and they had to lead efforts at reconciling and rebuilding the nation in addition to teaching children coexistence and giving them hope for a peaceful future. The story of Rwanda’s success after the burden of an unnecessary tribal war captured the imagination of the new dispensation that were then tipped about an entity created solely to handle investors — the Rwanda Development Board under Clare Akamanzi.

Akamanzi and her deputy Emmanuel Hategeka were invited to Harare as strategists in April 2018 to tip Zimbabwe on how it could also create an environment conducive for investment. Rwanda, for example, gives 99-year leases on land, makes sure an investor has electricity, internet and a factory shell in addition to tax exemptions and other incentives as a way of attracting investors.

Without going into detail about how the Rwanda Development Board operates, Zimbabwe has a long way to go just to fulfil the initial conditions that are offered as basics in Rwanda. We have a deficit as far as electricity is concerned, we rely on South Africa and Mozambique to bridge the gap,   our data costs are high and connectivity is generally weak and I am not sure the government has any empty factory shells of its own that it could lease to investors. But this is not to say we must follow Rwanda’s strategies to the dot. We also have currency issues as the local dollar is inflationary and we are creeping back to redollarisation, of which under multi-currency, then Finance minister Patrick Chinamasa always complained that Zimbabwean products could not compete internationally because of the cost associated with the use of a strong currency. Unfortunately, that is where we are now after current Finance minister Mthuli Ncube gave people the greenlight to trade in the US dollar again in March this year. Policy contradictions and inconsistencies is one area we need to look at as the back and forth pronouncements are likely to put off investors who do not need surprises as investment is long-term and risk should be minimised at all costs.

The ZIDA cannot be touted as an achievement in itself, but a step in the right direction. One hopes it does not fall prey to the usual bureaucracy and delays associated with people who need their palms to be greased before they can facilitate a deal. And all those other institutions that used to support potential investors like the ZIA— another “one stop shop and the home of investors”— what becomes of them? We need to improve efficiency and leverage on what we already have, without creating duplications or ending up with redundant institutions which do not add value to the economic growth, which we desperately need at the moment.

That Zimbabwe is in the doldrums is an understatement and the task ahead is not easy. Economic recovery will not be instant considering the length of time we have been isolated and how much we have lagged behind in terms of technological advancement. We rely on machinery associated with the Third Industrial Revolution for our manufacturing when others are far ahead of us and we cannot match their production lines, let alone economies of scale.

Critical to recovery as it is, ZIDA cannot work miracles if the investment environment is not conducive and attractive to foreigners. The macro-economic conditions have to be in sync with world business practice. The ZIDA will need government to deal with the conflation between Zanu PF party and government; its efficiency depends on the securocrats minimising interference and our economic recovery and growth demands economic reform first.

While we invite foreigners to take up partnerships with locals, or to start mining ventures from scratch, for example, there are some infrastructure developments that we must drive and not wait upon foreigners, especially  the road and rail network. The AfDB 2019 report testifies to how bad our infrastructure is. Should we compensate white formers farmers first or clear arrears to unlock credit lines to resuscitate social services and improve infrastructure?

We also have housekeeping issues to deal with. While it is true that sanctions have hurt the economy in a big way, what are we doing at policy level to have them lifted? Marching and singing against sanctions is a lazy approach to measures that strike at the heart of the economy. We still need to improve our human rights record, build our democratic institutions and prosecute only when necessary rather than persecute each other over something as flimsy as political party affiliation.

ZIDA must not be launched, hyped and then receive no investment-related enquiries. Let us strive to make the politics right, the regulatory framework right, the investment environment right, the currency right, communication network right, the transport network right and get the right people to receive those who want to invest in Zimbabwe.

 

l Feedback: cmabasa@standard.co.zw

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