Zimbabwe is Open for Business

By Bernard Bwoni

Zimbabwe is an extraordinary country that is setting a whole different standard to the concept of economic development. The country has faced challenge after challenge and has withstood all adversity and continues to do. There have been challenges of communication (or lack of) and consistency (or lack of). The fact of the matter is that Zimbabwe is a country on the cusp of a phenomenal economic take-off and that is unavoidable. The difference between this impending take-off and what most African countries temporarily achieve (and then inevitably falter) is the fact that the Zimbabwean model is backed and manned by genuinely economically empowered natives. That is crucial. I will clarify and quantify this later on in the article. The bottom line is that the country’s land reform and economic empowerment strategies have been a success and are starting to bear fruition.

Zimbabwe has one of the most elaborate financial and banking systems by regional standards with an array of commercial banks, merchant banks, building societies, asset management companies, finance houses and insurance companies. The investment process in Zimbabwe is also made quite fluid by the highly effective Zimbabwe Investment Authority (ZIA). The Zimbabwe Investment Authority is the first port of call for all investors and their website www.investzim.com is vibrant and provides up to date investment information and processes. All investment information, facilitation, procedures and documentation to be completed and submitted are clearly explained. ZIA is there to assist investors and potential investors with obtaining all necessary permits, licences and all authorisations to fully set their business in Zimbabwe. The country is surging ahead with initiatives to improve the economy and to make for smooth and ease of doing business. There have been genuine and practical efforts on the part of government to spruce up the business environment, cleansing it of all obstacles that Zimbabwe less attractive to capital. The country has already reduced the time it takes to register a company from 90 days to 13 days with the aim of reducing it to 3 days in due course. 

This has already caught the attention of potential investors and when I visited the Zimbabwe Investment Authority, I was informed of the surge in enquiries and the interest investors are taking in the country. I was met with unmatched professionalism and high standards of service at the ZIA offices. The offices are clean and airy and staff from reception all the way to all the main offices could not do enough to assist and provide you with information. One of the Executives we met, Mr Ranga, was responsive and provided us with relevant and precise information about business registration and all the processes. Now this the standard of reception the potential investor is receiving and it is world class. The young lady at reception was smiling and warm. This is the country setting the tone, the right tone for its inevitable and impending economic take-off. This is a country shouting and shouting loudly that it is open for business. And it is and there are business opportunities.

The Zimbabwe Law recognises the issue of property rights and this is enshrined into the new constitution. It guarantees the right to private ownership and Chapter 4, Part 2, subsection 71 of the new Constitution addresses the overall issue of property rights fairly and again in line with international law. The rights are extended to all people and the rights to compensation are recognised. Part 2, Section 72 of the Constitution points out that access to agricultural land is seen as a “fundamental right” and that “every citizen of Zimbabwe has a right to acquire, hold, occupy, use, transfer, hypothecate, lease or dispose of agricultural land regardless of his or her race or colour’’. The rights are extended to all people and the rights to compensation are recognised. However, the issue of property of agricultural land needed to be and was addressed in line with the need to “redress the unjust and unfair pattern of land ownership that was brought about by colonialism”. The issue of property rights is clearly covered under Zimbabwean law and no investor is going to have their investment taken from them. This has never happened in the country and is unlikely to happen.

The country has been making significant strides in infrastructure development initiatives.  There have been practical and sustained efforts in the rehabilitation and construction of road networks, power generation, information technology and water treatment. The Tokwe Mukosi is nearing completion and Kariba is halfway through retooling and rehabilitation. The completion of the Hwange Thermal Power Expansion, Gwayi-Shangani and Makomo will generate additional thousands megawatts into the national grid. In the next few years once all the power generation projects are completed Zimbabwe will potentially be exporting power to its regional partners. As we speak load shedding has become a thing of the past in Zimbabwe. Power supplies have been constant and consistent even before the completion of all the power generation projects taking place in the country. The work at Morton Jaffray Waterworks was recently completed in Harare and water treatment rehabilitation and retooling is being cascaded nationwide.

There is evidence on the ground of dualisation of the country's major highways with Harare-Bulawayo at an advanced stage, the Harare-Beitbridge are taking shape. The Plumtree-Mutare road and Airport road have now been completed and are world-class. Zimbabwe has made inroads in information and technology assimilation with a 100% mobile penetration according to the Postal and Telecommunications Regulatory Authority (Potraz). Zimbabwe has in excess of 13 million mobile phone subscribers which easily translate to every individual in the country having access to mobile phone communication. The strength of the housing market in any country is a very important indicator and in the current economic environment in Zimbabwe it needs to be used with caution though. It could be that house prices in the country are overpriced but it is a demand and supply issue. The strength of the Zimbabwe housing market lies in the fact that most homes are owned outright with no mortgage or outstanding loans. There is money in brick-and-mortar.

The Zimbabwe agricultural sector is set for a revival in the coming season as there has been significant investments in the sector. Crucially the Presidential Inputs Scheme will continue to benefit many households throughout the country for the current agricultural season. This strategic scheme targets maize, small grains and livestock which are important for the country’s food security and national self-sufficiency. These are positive and proactive initiatives on the part of the government to stimulate agricultural growth as this ensures that seeds are readily and timely available at the start of the planting season. It is from an agricultural base that the country’s economic revival is stemming from. There has also been a great deal of interest and initiative from the diaspora community in engaging in agriculture through massive resource mobilisation strategies and practical initiatives. The Zimbabwe Agricultural Initiative (ZAI) has been engaging government in initiatives to boast agriculture in the country. ZAI is an initiative of Zimbabweans based in the diaspora and they are engaging government to invest in the country’s agricultural sector.

One of the key stumbling blocks to the revival of the agriculture sector has been access to financial resources in particular the small-scale and newly resettled farmers. The government has been proactive and made good progress in terms of facilitating resources mobilisation from the country’s financial institutions. The Prescribed Asset Status (PAS), the Liquid Asset Status, tax exemptions and government guarantees are some of the key strategies the government has been pursuing to ensure that the agricultural financing institutions more willing to fund the sector.  There has been progress in allowing the 99 year leases to act as collateral for farmers to access funding from banks. There are in principle provisions to make the leases bankable. The banking sector has mobilised in funding for farmers to access working capital under a number of available credit schemes and so far support for contract farming arrangements have been in place through the Agricultural Market Authority.

In the past farmers have struggled paying back loans and this has made the financial institutions very sceptical and reluctant to provide new lending to farmers. This has in turn has had a negative impact on agriculture and productivity. The government is now ensuring certainty of repayment through an efficient Stop Order System which help address the challenges relating to farmers avoiding paying through side marketing. Robust recovery systems which guarantee financial institutions that farmers will repay have now been put into place. The Bankers Association of Zimbabwe (BAZ) is currently developing and making arrangements for the re-establishment of the Stop Order System with the support of the Reserve Bank of Zimbabwe, The Ministry of Finance and Economic Development and The Ministry of Agriculture, Mechanisation and Irrigation Development. The government has been encouraging Contract farming arrangements between farmers and cotton merchants through the continuation of the Buying Quota System for contracts to limit side marketing of contracted cotton which will also support loan recovery and the sustainability of bank funding for cotton production. These are all positive strategies to rebuild trust with the lending institutions.

The government has been keen to induce productivity in agriculture via joint ventures with interested parties. The government of Zimbabwe owns expansive estates of good agricultural land nationally through the Agriculture and Rural Authority (ARDA) and the Cold Storage Commission (CSC) which currently lies under-utilised and as such has been inviting investors willing to partner ARDA and CSC in joint ventures. Under the arrangements the potential investors will provide capital whilst ARDA and CSC will provide the land and infrastructure for the estates. Initiatives such as the diaspora based ZAI have been buying into this and looking to partnerships with government and local farmers.

The country is headed for better outcomes and there is no other way round that. However, there is need to address some of the policy and administrative challenges that have held back previous government initiatives. Corruption and other administration malfunctions have been the albatross around the country’s economic turnaround and it is action and actual follow up which will ensure that this is nipped in the bud. There are no boundaries to the possibilities that Zimbabwe has to offer her citizens and the opportunities are being presented without limits. There are endless possibilities and opportunities for investors, both domestic and external. Now is the time to invest in this unique and strategically placed African country. Africa’s safest and most peaceful country.

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