ZIDA: Conduit for free flow of investment, NDS1 success

Varun Beverages was awarded private sector special economic zone status. It’s a good example of how foreign investment can create employment
Lovemore Chikova Development Dialogue

Foreign direct investment (FDI) and local investment are increasingly being viewed as some of the solutions to provide a solid base for economic development, industrialisation and modernisation in emerging economies.

This view is not lost in Zimbabwe, hence the clear inter-link between the recently unveiled Zimbabwe National Development Strategy 1 (2021-2025) and the Zimbabwe Investment and Development Agency (ZIDA).

ZIDA is a one-stop shop investment entity mandated with handling all issues relating to investments, be they foreign or local, and creating an investment environment that is conducive to the attraction of business.

The creation of the One Stop Investment Services Centre within ZIDA comes with a total package that addresses the specific needs of any investor, hence the optimism that the country will experience a great leap forward in attracting investments.

In the course of implementing provisions of the NDS1, it should always be remembered that foreign and local investment can play an important role in supporting the economic blueprint.

The NDS1’s success will depend on how institutions tasked with various roles in supporting it are going to play their part perfectly.

The reform and opening up policy being pursued by the New Dispensation is reflected in both the NDS1 and ZIDA, whose roles tend to have one goal — that of achieving economic growth, industrialisation and modernisation.

There is no doubt that the attraction of both foreign direct investment and local investors will support the NDS1 through a wider use of new technologies that enhance industrial production.

It is important that investment organs like the Zimbabwe Special Economic Zones Authority have been placed under the care of ZIDA, thereby widening the scope of work for the investment agency.

The Zimbabwe is Open for Business policy pronounced by President Mnangagwa is directly meant to encourage investors to make the country their preferred destination for their capital.

The theme rings through the NDS1, considering that the economic blueprint brings to the fore a fresh way of conducting business that will be profitable for the country.

This perhaps explains why NDS1 has some sections mentioning ZIDA and investment in general as some of the institutions and aspects that will drive its success.

NDS1 intends to deal with challenges related to inadequate scrutiny around agreements with investors, including fiscal concessions.

To achieve this, especially in the area of minerals exploitation, an investment committee comprising of the Office of the President and Cabinet, the Ministry of Mines and Mining Development and Treasury will be chaired by ZIDA.

The committee will assess capable investors and oversee the investment agreements.

This committee will be crucial in driving investment and ensuring that deals are beneficial to the country.

It is equally important that NDS1 places ZIDA at the forefront as the chair of this committee, as this is a recognition of the mandate given to the investment agency.

ZIDA is also set to play an important role on the aspect of engagement and re-engagement, and the positive portrayal of Zimbabwe’s image to prospective investors.

The fact that one of the mandates for ZIDA is to enhance the ease of doing business means that it fits well into the broad agenda and objectives of NDS1.

There is need for more investors in sectors such as mining, infrastructure, agriculture, tourism and manufacturing. And the capital brought by these investors will strengthen business and help Zimbabwe develop into an upper middle income economy by 2030, as envisaged by the NDS1.

This places a huge responsibility on ZIDA to fully function within the broad mandate of NDS1, knowing quite well that the country is desperate for the flow of capital in the various sectors.

In the context of the NDS1, this is important in helping investors set up their businesses, thereby creating employment opportunities.

Tasked with coming up with incentives for the investors, ZIDA becomes crucial in the clarity of the business operating environment that the NDS1 envisages.

This means incentives and guarantees for investors should be spelt out clearly as pointed out in the ZIDA Act to avoid situations where the potential investors are not sure on how their investments will be handled.

Dealing with profits and repatriation of funds is a sensitive issue for investors who are always eager to analyse the benefits of investing their capital in a destination.

Increasing the flow of investments into Zimbabwe will help with the funding of many of the projects and programmes envisaged under NDS1.

It is a fact that the country has not been doing well when it comes to the attraction of investment, and according to the World Investment Report, foreign direct investment was stagnant at US$400 million between 2010 and 2013. In 2018, the country recorded foreign direct investment inflows of US$745 million, up from US$349 million in 2017.

The burden lies on ZIDA to help improve these figures by instituting appropriate measures that attract investors.

In line with the devolution agenda which the NDS1 is pursuing, it will eventually be important that ZIDA ultimately decentralises its operations to provinces as a means of serving at the lowest structures of governance.

In this way, ZIDA becomes a crucial part of both the NDS1 and the devolution process.

Very soon, provinces will be required to craft their own economic programmes and these will obviously include the attraction of investors.

This enables ZIDA, as the agency overseeing all investment deals, to provide the expertise on how the provinces can successfully attract investment in various sectors.

ZIDA was established under the Zimbabwe Investment and Development Agency Act, which repealed the Zimbabwe Investment Authority Act, the Special Economic Zones Act and the Joint Ventures Act, all which were separately dealing with investors.

It brings the work done by these institutions under one roof and establishes a One-Stop Shop Investment Services Centre comprising organisations responsible for issuing various licences to investors, including relevant Government ministries and parastatals.

ZIDA is tasked with carrying out deliberate efforts through various means to promote, plan and implement investment promotion strategies for the purpose of encouraging investment by both domestic and foreign investors.

But the job ahead for ZIDA is mammoth, if the investment agency is going to play its part in aiding the success of NDS1, especially on bringing confidence of doing business in the country.

The main aim should be to attract quality investments that add value to the economic recovery efforts being pursued under NDS1.

If handled well, both foreign direct investment and local investments can result in the enhancement of an export-oriented economy, thus generating foreign currency instead of consuming it through imports.

An export-oriented economy is likely to fulfil many of the objectives of NDS1, including the attraction of new technologies, ramping up of the manufacturing sector, industrialisation and financing of infrastructural projects.

Investments, be they local or foreign, can aid in boosting of competitiveness of companies, a move that will result in them being able to produce quality goods that can attract takers in other markets.

In this way, it becomes clear that ZIDA can actually play a central role in the revival of the economy as part of the NDS1 strategies.–hera;l.cl.zw