eBusiness Weekly
Business Writers…
Government plans to review Bilateral Investment Promotion and Protection Agreements (Bippas) to correct policy slips of the previous years, which are believed to have hindered Zimbabwe’s ability to attract foreign investment since the turn of the millennium.
In 2000, Government embarked on the fast-track land reform programme and some farmers protected under Bippas lost their farms, to the detriment of the country’s image in respect of property rights.
The fast-track land reform was meant to correct land ownership imbalances, which saw about 4 500 white farmers (4 percent of the farming population total) owning 11 million hectares (35 percent to 50 percent) of productive land.
While the land reform programme was necessary to redress the skewed land ownership, the process affected assets that were under Bippas, scaring away investors.
President Emmerson Mnangagwa-led administration now looks to redress the situation, as Harare makes efforts to promote investment.
Since his inauguration in November last year, President Mnangagwa has on several occasions emphasized his tenure would prioritise economic turnaround on the back of a strong FDI and agriculture performance.
This week Foreign Affairs and International Trade Minister Retired Lieutenant General Sibusiso Moyo told Business Weekly that Government would revise all policies with a view to correct mistakes of the past including a flawed implementation process.
This exercise is widely expected to result in compensation of investors who lost property and at the same time reassure existing and potential investors that the country means business.
“We will revisit our policies to correct some of the mistakes that occurred during the implementation process, particularly the land reform.
“Although the land reform programme is irreversible, our Government will put measures to correct some of the mistakes associated with the implementation of the land reform programme.
“The issue of Bilateral Investment Promotion and Protection Agreement will be examined, as we carry out an audit of our policies including the land reform programme,” Minister Moyo said.
Since the turn of the millennium, Zimbabwe’s gross domestic product contracted by an estimated 50 percent while foreign investment virtually dried according to the World Bank.
Several firms also closed and threw thousands of citizens out of employment.
GDP currently stands at $14 billion.
FDI remains worryingly low, averaging just under half a billion dollars in the last few years, compared to an average of $2,5 billion achieved by regional peers such as Mozambique.
Once some of the “past mistakes” are addressed, Zimbabwe is expected to mend relations with the West, particularly Britain and the United States, which have been strained for almost two decades.
Among the major causes of the uneasy diplomatic and economic relations were claims of property violations, allegedly committed during the land reform process.
While Finance and Economic Development Minister Patrick Chinamasa indicated in 2014 that there was nothing amiss with compulsorily acquiring land, he bemoaned Government’s failure to raise the required funding to compensate affected white former commercial farmers.
In terms of Bippas, Government had committed to fully compensate foreign investors in the event of an investment dispute, a cardinal rule Zimbabwe failed to observe in a number of cases to retain investor trust during the previous administration.
Then deputy head of mission at the British Embassy in Harare, Chris Brown, in 2014 said British investors were interested in investing in Zimbabwe but were worried about the perceived lack of respect for property rights and uncertain business climate.
Lack of meaningful investment, despite an array of potential investment opportunities, is largely seen as part of the reasons Zimbabwe continued to experience near stunted growth, except briefly soon after dollarisation in 2009.
But Minister Moyo said this week that going forward, the country plans to “open a new page” for the country by normalising relations with countries it differed with in the past.
“We want to focus on achievement and repair past mistakes. As demonstrated by President Emmerson Mnangagwa, the Government will promote and protect democratisation and rule of law will be the lynchpin of our society,” said Minister Moyo.
A top Government official who requested not to be named said Zimbabwe had paid more than half of the estimated $150 million compensation to deposed white farmers.
“Zimbabwe is very serious about re-engaging the international community as it has already paid over $80 million out of the possible $150 million.
“The Treasury has sent delegates across the country to evaluate some farms in order to ensure compensation and productivity.
“Time and again we have assured the international community that all costs and developments will be paid to the former users of land as written in the constitution,” said the official.
Since November 24, 2017 when President Mnangagwa was sworn in, Government has demonstrated its commitment to correct issues that were done wrongly in the past.
It has also sent huge intentions to open up investment opportunities to foreigners by removing the 51/49 percent shareholding structure, as previously enshrined in the Indigenisation and Economic Empowerment Act.
The 51/49 requirement now applies to the diamond and platinum sectors only. The amendments are soon expected to be legalised through the Finance Act.
