What is Foreign Direct Investments?

Foreign direct investment is a long-term relationship aimed at obtaining a lasting interest and control by a resident entity of one economy (foreign direct investor or parent company) in an enterprise that is resident in another economy (direct investment enterprises).Foreign Direct Investments are viewed as one of the major contributors to economic growth. It is also viewed as a means to alleviate poverty and acquire additional funding for national programmes..

Importance of Foreign Direct Investments

Improvements in economic policies are needed to enhance macroeconomic performance and attain the minimum growth rate required to meet the Millennium Development Goals set by the United Nations. An increase in investment is crucial to the attainment of sustained growth and development in Zimbabwe.

Legislation Governing Foreign direct investment in Zimbabwe

The government on the 07th February 2020 promulgated the Zimbabwe Investment and Development Agency Act [Chapter 14:37] (the “Act”) which repealed the Zimbabwe Investment Authority Act [Chapter 14:30] thereby creating an Agency known as the Zimbabwe Investment and Development Agency (“ZIDA”) whose mandate amongst other things is the promotion, protection and facilitation of investments in Zimbabwe.

One Stop Investment Services Centre

Davison Kanokanga in a presentation entitled Investment Enablers and Risk Mitigation stated that a ‘one stop investment services centre’ which is also known as a ‘one stop shop’ facilitates the ease of doing business as the registration of business and issuing of licenses, permits and grants can be obtained with ease under one roof.The One Stop Investment Services Centre was established under the Act. It consists of desks which represent the following departments:

1. Public private partnerships
2. Special economic zones
3. Immigration department
4. Zimbabwe Revenue Authority (ZIMRA)
6. Environment Management Agency (EMA)
7. Reserve Bank of Zimbabwe (RBZ)
8. Office of the Registrar of Companies and Other Entities
9. National Social Security Authority
10. Zimbabwe Energy Regulatory Authority (ZERA)
11. Ministry of Mines
12. Ministry of Local Government
13. Ministry of Labour
14. Zimbabwe Tourism Authority

Compliance with domestic legislation

Investors shall abide by this Act and other legislation in force in the Republic of Zimbabwe, as well their contractual undertakings.

Responsibility of the investor

In addition to their basic obligations to act in accordance with all laws of Zimbabwe, investors shall have common obligations, including those obligations relating to:

The preservation of the environment; and The maintenance of independent accounts and records in respect of the given enterprises in accordance with international accounting standards; and Making sure that the products produced, works conducted and services provided by them comply with national and international standards; and Respecting the national heritage, customs and traditions of Zimbabwe.

Employment of Senior Expatriate Staff

An investor may appoint, regardless of their nationality, any individual who is a qualified person as a senior manager, technical and operational expert or advisor with respect to the investments in accordance with the laws of Zimbabwe.

Transfer of Funds

Investors may without restriction or delay and after paying all tax obligations imposed on any amounts, in a freely convertible currency transfer the following funds into and out of Zimbabwe:

Contributions to capital, such as principal and additional funds to maintain, develop or increase the investment; and Proceeds, profits from the asset, dividends, royalties, patent fees, license fees, technical assistance and management fees, shares and other current income resulting from any investment under the Zimbabwe Investment and Development Agency Act Proceeds from the sale or liquidation of the whole or part of an investment, including payments made pursuant to a loan agreement; and Payments resulting from any settlement of investment disputes; and Earnings and other remuneration of foreign personnel legally employed in Zimbabwe in connection with an investment.

Conclusions

Foreign direct investment is important as its development benefits include employment generation and growth, raising skills of local manpower, integration into the global economy, transfer of modern technology and infrastructure development.With the promulgation of the Zimbabwe Investment and Development Agency Act, the Government has stepped up its efforts to make Zimbabwe an attractive foreign investment destination.