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'Foreigners can now invest in Zimbabwe's restricted sectors'

by Staff reporter
15 Sep 2019 at 06:46hrs | Views
Government has reviewed the ownership of restricted areas by making it permissible for individuals, who are not Zimbabwean citizens, to invest in previously "reserved sectors" of the economy.

This follows the scrapping of the Indigenisation and Economic Empowerment Act earlier in August. The Indigenisation and Economic Empowerment Act had provided that anyone of any race could qualify to invest in restricted sectors, provided they hold Zimbabwean citizenship. The reserved sectors included: agriculture (primary production of food and cash crops), transportation, retail and wholesale trade, barbershops, hairdressing and beauty salons, employment and estate agencies and grain milling, as well as bakeries, tobacco grading and packaging, tobacco processing, advertising agencies, milk processing and provision of local arts and crafts, marketing and distribution.

But, the authorities have moved to basically scrap the reserved sectors concept.

"A person who is not a Zimbabwean citizen may invest in a business in the reserved sector of the economy if that business meets certain criteria or thresholds prescribed by the Minister responsible," reads part of the recently launched National Investment Policy.

Confederation of Zimbabwe Retailers (CZR) Denford Mutashu commended the move, saying it will boost FDI inflows into the country.

Retail is one of the sectors that was reserved under the then Indigenisation and Economic Empowerment Act.

Said Mr Mutashu:  "It augurs well with the Zimbabwe is open for investment mantra which President Mnangagwa and the rest of Government has been pushing. Zimbabwe is not xenophobic and we should embrace well-meaning investors regardless of geographical boundaries. The treatment being given some foreigners, who have invested in our retail sector is a serious cause for concern and flies on the face of the President's drive."

The latest development is a significant about-turn from the 2016 directive that saw Government ordering all licencing authorities to stop issuing licences to foreign-owned companies that wish to invest in the reserved sectors of Zimbabwe, while those who are already in the sectors were told to pay a proposed empowerment levy if they have not yet complied with the law.

In respect of the empowerment levy, non-complaint firms could be levied up to 10 percent of their gross turnover, but the levy can be moderated up to 100 percent on the basis of compliance, said Government at the time.

But, the scrapping of the local empowerment law means these rules are no longer applicable. The Indigenisation and Economic Empowerment Act was blamed for driving away investment at a time the economy was desperate for fresh injection of capital to foster growth and create jobs. The review of ownership rights for restricted areas is one of the measures that Government is implementing going forward as it seeks to ramp up Foreign Direct Investment (FDI) inflows into the country.

These measures are outlined in the new National Investment Policy. Through the new investment policy, Government has targeted to increase the share of private sector investment in Zimbabwe to at least 25 percent of Gross Domestic Product (GDP) by 2030. Earlier this month, Cabinet approved the National Investment Policy, which provides a comprehensive framework for the coordination, facilitation, promotion, protection and retention of investment in Zimbabwe in line with Vision 2030 and the Transitional Stabilisation Programme (TSP). Zimbabwe's foreign investment inflows for 2018 rose to US$745 million, up from US$349 million previously.

The United Nations Conference on Trade and Development (UNCTAD) World Investment Report applauded efforts being made to lure investors, highlighting that Zimbabwe's FDI inflows were emerging from an "extremely low basis."

Source - sundaymail