Towards a new economic order in Zimbabwe

Towards a New Economic Order: Investment Policy Statement and Action Plan of the Government of Zimbabwe.

i. Introduction

1.1. As Zimbabwe transitions to a new economic order and prepares to regain its place as a leading African economy, the Government, by this Investment Policy Statement, underscores the key role of investment in improving the well-being of Zimbabweans. This investment policy statement sets out the key principles that will guide Zimbabwe's investment policy and elaborates a plan of action to expeditiously and effectively implement them.

1.2. The Government of Zimbabwe's commitment to those investors who have been the lifeblood of our economy in good and bad times is to provide a stable business environment that enhances their growth and competitiveness and brings jobs and opportunities to the people of Zimbabwe. For this reason, the Government of Zimbabwe recognises the essential role of foreign direct investment in advancing Zimbabwe's development by connecting domestic entrepreneurs to the global economy, permitting the inflow of capital, Modern technology and know-how and creating jobs for Zimbabweans.

1.3. Zimbabwe's historical realities, and the fact that dispossession of ancestral land was the fundamental reason for waging the liberation struggle means that land reform cannot be reversed. The Government recognises, however, that the execution of land redistribution has had unfortunate outcomes and consequences and is setting up mechanisms to address these.

1.4. The Government of Zimbabwe hereby declares, from this point forward and without prejudice to the issues addressed in (1.3), its commitment to companies that invest in Zimbabwe and support its economic development. Zimbabwe's economy will be founded on sound market principles and principles of legal protection that encourage and protect private enterprise and the fruits thereof, while gainfully interacting with strategic public enterprises run professionally and profitably, all to yield a properly run national economy in which there is room and opportunity for everyone.

1.5. The people of Zimbabwe are the cornerstone to our success and the strongest pillar to build a strong and sustainable economy. The Government of Zimbabwe hereby commits to implementing a reform agenda that will build a competitive private sector that will maximise linkages, deliver high quality jobs and support long-term growth.

1.6. The Government of Zimbabwe commits to adopt and implement consistent and transparent policies that render Zimbabwe a competitive and preferred investment destination. To this end, Government commits to respect obligations under Bilateral Investment Protection and Promotion Agreements (BIPPAs) which shall be applicable to all investors and shall be modernised to reflect good international practices.

1.7. Reforms undertaken will seek to increase Zimbabwe's attractiveness for all types of investment, but in particular for investment aligned with this vision. The objectives of these reforms will be achieved by:

a) Providing an efficient , effective and transparent system for attracting and carrying out investment;
b) Enhancing, modernising and streamlining the legal framework for investment; and
c) Promoting the development and application of good international standards and practices regarding investment.
ii. Principles of a strong, sound and sustainable investment policy

1.8 Using as guidance good practices found in Modern investment agreements, the Government of Zimbabwe will endeavour to apply the following key principles for its investment policy:

a) Non-discrimination between domestic and foreign investors and among foreign investors.
The Government commits to treating all foreign and domestic investors and investments as favourably as any other investor in like situation in relation to the establishment, expansion, operation, and protection of their investments, subject to such exceptions as are provided for in domestic laws, regulations and policies.

b) Effective protection of property:
The Government commits to the protection of all investments from expropriation, or from measures taken that will have a similar effect, except for a public purpose and on a non-discriminatory basis, in accordance with national laws and principles of international law, and subject to the prompt payment of adequate and effective compensation.

c) Transparency and good regulatory practices:
The Government commits to ensuring that all laws, regulations, administrative guidelines and policies pertaining to investment are enacted following proper notice and consultation and are available publicly in a prompt, transparent and readily accessible manner.

d) Maintain environmental and social standards:
The Government commits to ensuring that all labour, health, safety and environment regulations are adhered to by domestic and foreign investors.

e) Promote investment retention:
The Government commits to implementing effective mechanisms to manage investors' grievances, in order to foster investor confidence and ensure that investment is retained.

f) Avoid mandatory performance requirements:
The Government commits to ensuring that the legal regime for foreign direct investment is founded on sound market principles that do not permit mandatory and/or arbitrary performance requirements that distort or limit the expansion of trade and investment.

g) Facilitate entry and sojourn of personnel:
The Government commits, subject to appropriate policy prescriptions intended to drive foreign direct investment while generating employment for Zimbabweans, to facilitate the entry and stay in Zimbabwe of key foreign technical and managerial personnel for the purpose of engaging in activities related to foreign investment.

h) Pursue high standards of governance:
The Government of Zimbabwe commits to pursuing high standards of governance and combating corruption at all levels in order to ensure that all state institutions charged with overseeing any regulatory and administrative functions relating to investment or private enterprise shall do so in a transparent and efficient manner.

iii. Reform action plan & timeline
1.9 For immediate action:

The Government of Zimbabwe commits itself to expeditiously and constructively addressing outstanding legacy issues in keeping with modern investment principles.

(a) Compensation for losses sustained through Land Reform Programme:
The Government of Zimbabwe has stated its intention to compensate those farmers who lost their investments through the land redistribution programme. To ensure equitable compensation, the Government of Zimbabwe is considering a number of measures including the establishment of a special ad-hoc tribunal based on international good practices to determine, amongst others, the value of compensation payable and modalities for payment.

(b) Amendment of the Indigenisation and Economic Empowerment Act:
The Government of Zimbabwe will amend the Indigenisation and Empowerment Act in order to ensure certainty for investors. While the Government will encourage partnerships between international and Zimbabwean firms, the proposed amendments will confine the 51-49 percent indigenisation threshold to only two minerals in the extractive sector namely, diamonds and platinum. For these two sectors, the Ministry of Mines shall be charged with developing a bill and regulations to create a non-discretionary legal and regulatory regime founded on the principles enumerated above.

(c) Special Economic Zones.
Following the promulgation of the Special Economic Zones Act {Chapter 14:34}, the Government of Zimbabwe will accelerate establishment of Special Economic Zones (SEZs) in order to attract investment and increase exports. The SEZs are aimed at promoting value addition and beneficiation by offering targeted and specific incentives to qualifying investments.

1.10 The Government proposes hereby to adopt an Action Plan for the next six months as follows:
(a) Modernisation of the Legal Framework for Investment:

The Government of Zimbabwe is committed to reforming its investment legislation following the principles stated in 1.8 (a)-(h) above. This process will be conducted in a transparent manner, in consultation with all relevant and interested parties and will be informed by best international practice. The new investment law shall ensure non-discrimination between domestic and foreign investors and their investments treatment no less favourable than that accorded in like situations to domestic investors in relation to the establishment, expansion, operation, and protection of their investments with any specific exceptions being provided for in a negative list to be annexed as a schedule to the law. The new investment law will enforce the protection of investors in accordance with the principles elaborated above.

(b) Strengthening of Investment Promotion and Retention Framework:
Recognising the importance of attracting new investment and of reinvestment by existing investors, the Government of Zimbabwe will take actions to enhance and upgrade the investment promotion and aftercare strategies. To this end, the Government will take actions to enhance and upgrade the investment promotion and aftercare strategies. To this end, the Government of Zimbabwe will undertake efforts to:

i. Streamline all processes and procedures to reduce administrative costs.
ii. Implement mechanisms to address concerns and grievances that investors face during the conduct of their business in Zimbabwe.
iii. Ensure effective use of the incentives regime.

(c) The new investment law and the institutional framework for investment promotion, both of which will serve as building blocks for Zimbabwe's new economic order will be submitted to Parliament as soon as possible.
1.11 Implementation of Zimbabwe's New Investment Policy and Legal Framework

(a) Investment Entry and Establishment
The Government of Zimbabwe will enhance the ability of firms to enter and establish in Zimbabwe by:

i. Eliminating prior screening of foreign investors and adopting a risk-based approach that applies regulation to prevent infractions by any investors — domestic or foreign — of laws enacted to preserve national security public health and other national imperatives.

ii. Identify and remove legal barriers to entry currently contained in legislation.

(b) Investor Retention.
The Government of Zimbabwe will adopt a new investment promotion, retention and expansion strategy that clearly articulates the roles of domestic and foreign investment towards achieving Zimbabwe's development goals.

The Government of Zimbabwe commits to implement effective mechanisms to manage investors' grievances, in order to address them before dispute escalation and thus foster investors' confidence, ensure that investment is retained and expanded, and increase regulatory and administrative transparency.

Recognising the importance of reinvestment by existing investors, the Government of Zimbabwe will take actions to enhance and upgrade the investment promotion functions of the Zimbabwe Investment Authority (ZIA) and ensure their effective implementation. ZIA will develop a value proposition commensurate with the locational advantages offered to investors. Proactive investment promotion will follow good practices involving sector targeting and aftercare.

(c) Investment Incentives.

To ensure transparency and predictability, the Government of Zimbabwe will develop and publish an inventory of all incentives currently offered to investors in Zimbabwe. This inventory will be updated periodically to ensure that it remains current. Incentives will be revisited periodically to ensure that they are effective and well aligned with Zimbabwe's development goals. ZIA will be responsible for carrying out efficiently the incentive award process in accordance with good practices that minimise distortions to competition and ensure transparency and good governance.

Competition for investment and changing global circumstances necessitate a dynamic investment policy framework. This reform action plan will therefore be updated periodically in order to be responsive to the ongoing changes in the global economy.

    This is the foreword to the National Investment Policy Statement by His Excellency E. D. Mnangagwa, President of the Republic of Zimbabwe.