Barriers to investment on the increase
http://www.theindependent.co.zw/
December 7, 2012 in Opinion
For too many years Zimbabwe has raised one barrier to foreign direct
investment (FDI) after another.
Column by Eric Bloch
There is an abysmal and contemptuous disregard for the irrefutable fact that
the country desperately needs such investment in order to attain substantive
growth of its economy. That growth is critical if a comprehensive reduction
of the overwhelming unemployment that has plagued Zimbabwe for too long is
to materialise.
A virile economy is essential to alleviate the immense poverty and suffering
that has not only afflicted an overwhelming majority of Zimbabweans, but has
also significantly contributed to the decline in the key infrastructure
required by the populace and the economy.
Facilities that have deteriorated include most parastatals, national health
and education, and many other utilities.
Our economy needs a solvent, stable and effective fiscus.
Zimbabwe has sizeable resources which are a magnetic attraction to FDI,
including a vast array of minerals much sought after internationally,
ranging from gold and platinum, to tantalite, lithium, chrome, diamonds,
methane gas, and much else. Its soils and climate enable it to produce
various agricultural commodities in national and international demand.
Zimbabwe has diverse tourism attractions. Its geographic location puts it at
an advantage to be a supplier of primary and secondary industrial products
to an extensive portion of southern and central Africa, which has a
potential customer base of more than 420 million people.
This is over and above an ability to export to further afield.
Complementing these, and many other potential economic resources, Zimbabwe
has a population which, with a few exceptions, is very able and
work-motivated (notwithstanding the considerable extent of Zimbabwe’s “brain
drain” to the diaspora in recent years).
With all these and many other economic assets, Zimbabwe could have been one
of the foremost economies in Africa, had it been a recipient of the
considerable FDI essential for the development and exploitation of the
economic opportunities.
It would also have accessed internationally-developed, state-of-the-art
technologies.
However, with ever-increasing determination, Zimbabwe has not only refrained
from accommodating the reasonable expectations of foreign investors, but
has increasingly created one barrier after another, or deterrents to
investment.
Any investor, be they foreign or domestic, save for a few exceptionally
high-risk takers, requires that investment be into an environment that has,
at the very least, a stable economy, and preferably one which is attaining
real growth.
In addition, he or she expects assured investment security, political
stability, absolute respect for property rights, and an environment which
has an assured, high level of law and order.
Over and above these essential characteristics, investors inevitably have an
expectation that the operations of the enterprise into which investment is
made would not be endangered, or their returns unduly minimised by
peremptory, overly-authoritarian bureaucracy and state interference, or by
unduly excessive taxation or other imposts.
Tragically, not only does Zimbabwe consistently disregard these investor
needs, and has steadfastly failed to ensure fulfilment of essential
requirements for a conducive investment environment, but it recurrently
pursues new and additional policies which worsen that environment, resulting
in an endlessly ongoing decline in new investments very desperately required
to restore well-being of the Zimbabwean populace.
As if the unilateral expropriation of lands, (effected without
compensation), the recurrent incidents of violence in order to displace
farmers from accessing their lands (without any State interventions to
contain that violence), did not suffice to alienate investor interest,
government has continuously enabled or condoned many other occurrences which
negate investor interest in Zimbabwe.
This includes the contemptuous disregard for the many Bilateral Investment
Promotion and Protection Agreements, and the introduction of oppressive,
ill-considered, counter-productive laws for the indigenisation of business.
The country has failed to administer its resources constructively, in
consequence of which it has allowed the majority of its parastatals to
decline to such a great extent that virtually none of the utilities and
services essential for a vibrant economy are available.
These include a grievous inadequacy of electricity supplies, a near-derelict
national airline, grossly insufficient rail services, as well as innumerable
other economically-essential needs.
It blatantly and has brazenly allowed and enabled endless, fiscally and
economically disabling corruption to prevail in both the public and private
sectors. It belittles and threatens the banking sector in general and
foreign-owned banks in particular, thereby continuously diminishing public
confidence in the banking sector, with inevitably consequential adverse
effects upon the economy.
It also unceasingly alienates international goodwill and strives to deflect
recognition of its economic misconduct by attributing all negatives to
allegedly “illegal international sanctions” which, in reality, are only
restrictions and constraints upon the government and its underlying
entities, and upon many of those who constitute the government.
As if all these and many other acts of commission and omission do not
suffice to be very major deterrents to the extensive investment needed to
resuscitate and develop the economy, endless pursuits that discourage
investments are pursued.
Most recent is the declared intent that the Zimbabwean security forces are
to become actively involved in monitoring and enforcing government’s
oppressive, non-constructive, indigenisation programme, to ensuren that
indigenous Zimbabweans have the mandatory 51% equity in companies.
Recent reports record that an entity of senior military, police and
intelligence service officers is to be mandated to monitor private sector
compliance with the indigenisation policies, legislation and regulations.
The functions of the security forces are to ensure the defence of Zimbabwe
and its people against any enemy actions; and to assure nationwide
compliance with the human rights-centred constitution and the like, but not
to engage in, or interfere with, economic and business policies.
Zimbabwe cannot benefit from security forces interfering in the day-to-day
conduct of commerce and industry, and doing so yet further dissuades
investors from pursuing investment opportunities in the country.