Negotiations of investment deals by individual line ministries without the involvement of the Zimbabwe Investment Authority (ZIA) violates investment laws and contributes to co-ordination discord, which frustrates potential investors.
Macro-Economic Planning and Investment Promotion Ministry legal officer, Meluleki Sibanda, said this while stressing the need to strengthen institutional framework and urgency in harmonising investment legislation and coordination in Zimbabwe.
“For now investors are approaching particular ministries to negotiate deals yet ZIA is there and has that sole responsibility. All investments must be co-ordinated by ZIA according to law. It is us Zimbabweans who are breaking our own laws,” said.
Zimbabwe is ranked 155th on the World Bank’s ease of doing business ladder out of 189 countries as of 2016 and 125th in terms of competitiveness index, lagging behind regional peers such as Zambia (96), South Africa (49) and Botswana at 71.
Zimbabwe’s foreign direct inflows have on average been below a billion dollars with a peak of $545 million in 2014, which, however, declined to $319 million in 2016, according to UNCTAD World Investment Report 2017. This is despite investment approvals of nearly $2 billion.
Sibanda said the Zimbabwe Investment Authority Act (Chapter 14:30), provides a clear framework on the functions of ZIA, which among others is to; deal with applications for investment licences, plan and implement investment promotion strategies, identifying sectors of the economy with potential for investment, responding to proposals from any domestic or foreign investor for joint ventures, monitoring and evaluating the implementation of approved investment projects, as well as co-ordinating investment activities in enterprises or sectors of the economy.
She, however, said often line ministries were usurping the ZIA functions against the provisions of law resulting in widespread investor concerns over perceived policy inconsistencies.
“It is this type of discord that the harmonisation of investment laws seeks to address. All investments have to be coordinated by ZIA to avoid inconsistencies. We need to create a conducive investment environment as a country because we are competing with other states for the same investment,” said Sibanda.
She said ZIA should be given room to steer investment issues and advise or recommend to concerned line ministries who should chip in to assist on technical issues that pertain to projects.
Sibanda, who was making a presentation on the harmonisation of investment laws during a Zim-Asset II consultative conference in Bulawayo this week, said Government was aware of investor concerns, as such, it was rolling out ease of doing business reforms so as to attract investment.
Some of the challenges include; unclear regulations and legislation, cumbersome administrative procedures, uncoordinated approach in the administration of requisite fees by Government agencies, outdated legislation and insecure property rights for investors.
As such, she said the Ministry of Macro-Economic Planning and Investment Promotion, was working with relevant arms of Government to address these concern.
Realising that the country is punching below its weight, Government through the Office of the President and Cabinet is already spearheading a reform process aimed at increasing doing business efficiency.
This includes speeding up the operationalisation of the One Stop Shop framework meant to weed out bureaucratic bottlenecks and enhance ease of establishing business.
“When regulations have the unintended effect of discouraging or even prohibiting long-term investment, they need to be identified and eliminated.
“The problem is not only with the regulations that exist but also with the regulations that do not exist,” she said.
Sibanda said failure to appropriately legislate investment can close off opportunities to make long-term investments that could be widely beneficial to the nation.
“Legal and regulatory framework can play a long role in fostering long term growth and economic growth. We need to create the right incentives and at the same time remove barriers that constrain long-term investment,” she said.
During the discussion, participants also stressed the need for Government and private sector to weed out corruption, in particular, which they said poses a major obstacle to foreign investment and participation in the economy.
Delegates were engaged in identifying laws, regulations and by-laws that impact negatively on investment and proposed amendments of those clauses.