Zida warns US$43,12m at stake in haulage, logistics industry

The Zimbabwe Investment and Development Agency (Zida) has raised alarm over the potential loss of US$43.12 million in foreign investment in the haulage and logistics sector, following the implementation of the Finance Act No. 2 of 2024, which reserves several economic sectors for local ownership.

The amended legislation, which came into effect earlier this year, expands the list of sectors under the Indigenisation and Economic Empowerment Act to include borehole drilling, haulage and logistics, shipping and forwarding, clearing and customs, and pharmaceutical retailing. Under the new rules, foreign participation in these sectors is either restricted or prohibited, with the haulage sector particularly affected.

Zida has since engaged the Parliamentary Portfolio Committee on Transport and Infrastructural Development seeking a policy review or regulatory flexibility for foreign investors who were licensed prior to the enactment of the Finance Act.

In a report presented by Zida CEO Tafadzwa Chinamo, the agency warned that the sudden policy shift threatens the operations of 34 foreign-owned haulage companies licensed between 2020 and 2024, which collectively employ 3,287 people and account for over US$43 million in investment.

"Zida notes with concern the removal of foreign nationals from the sector. However, there is need for a balanced approach on how government treats foreign investors that were licenced to operate prior to the promulgation of the Finance Act," Chinamo said.

According to Zida, the law did not distinguish between existing operators and new entrants, causing panic among investors who had been compliant with previous licensing conditions.

The agency argued that such abrupt regulatory changes risk violating investment protection clauses under the Zida Act and could expose the country to international arbitration claims for breaching investor obligations.

"Section 16(2)(B) of the Zida Act entitles every investor to the protection of their investment, while Section 17 guarantees against expropriation," the report stated. "A sudden change in law could be seen as indirect expropriation under international investment law."

Zida recommends that existing foreign players be allowed to continue operations under a ministerial waiver, as envisioned by draft regulations being worked on by the Ministry of Industry and Commerce.

The Ministry of Transport and Infrastructural Development, which oversees the licensing of transporters, has also weighed in, indicating that most foreign transporters were granted three-year licences prior to the changes and that these cannot be revoked unless there are violations of road traffic laws.

The ministry reportedly recommended that existing licences be allowed to lapse naturally, with future renewals restricted to companies that comply with the new reserved sector rules.

Zida warned that policy inconsistency poses serious risks to the country's investment climate.

"Cancelling the licences of foreign investors currently operating in the reserved sector would be deemed as an irrational change in policy that prejudices foreign investors," the agency said. "It is, therefore, imperative to allow those already operating to continue, provided they obtain a waiver."

The agency's intervention comes amid growing concern among industry players and foreign investors about the direction of Zimbabwe's investment policies, particularly in sectors critical to trade, fuel movement, and mineral transportation.