Since the coming in of the second republic in 2017, the mantra Zimbabwe is open for business has become part of the country’s foreign policy. Due to the volatile currency, lack of clear institutional governance frameworks, slow pace in domesticating international trade or investment treaties, the role of the government in the economy and national politics, there has been no meaningful investment in Zimbabwe. This article highlights the major challenges facing Zimbabwe is open for business mantra to underscore in its objectives and achievements.
By Ray Masuku
Firstly, the relationship between international trade law and domestic law is guided by two theories namely, the monist and dualist theories. The theories explain how international law is domesticated into national law. In this section, the theory of dualism in international trade law states that international agreements should be incorporated and domesticated into domestic or municipal law through legislative procedures. Domestication of international trade agreements in Zimbabwe is guided by sections 34, 326, and 327 of the 2013 constitution of Zimbabwe (as amended). The legislature as an arm of the government has an important role to play in the domestication of international treaties to promote economic prosperity in accordance with section 12 of the Constitution of Zimbabwe on the principles of foreign policy. Zimbabwe has not yet incorporated the World Trade Organization agreement into domestic law as well as a number of treaties. Zimbabwe is not using the Economic Partnership Agreement between the Eastern and Southern African countries (EPA-ESA). The Economic Partnership Agreement can go a long way in addressing Zimbabwe’s Sanitary and Phytosanitary issues through article 35 of the EPA. Zimbabwe has been slow in joining some international initiatives to foster international trade and investment as Zimbabwe has not joined the Extractive Industry Transparency Initiative. This is against the principles of good governance especially those related to transparency. Zimbabwe has to improve its domestication process to encourage investments to foster economic development.
Isolation from the international community has been Zimbabwe’s policy for the past two decades. The second republic has proclaimed that Zimbabwe is a friend to all and an enemy to none. One of the major issues of concern is the number of Bilateral Investment Treaties and Bilateral Investment Promotion and Protection Agreements which are in force in a scenario where the government says Zimbabwe is a friend to all and an enemy to none. Zimbabwe has 10 BITs that are in force and those BITs came into force in the 1990s. The global economy is changing as a number of events have taken place and new economic ideas are being implemented. Zimbabwe, therefore, needs to up its game by renegotiating and negotiating new BITs to be in touch with the current global economic events for economic prosperity through investment.
As we live in a global village where technology is advancing, there is no clear online institutional governance framework in Zimbabwe. The institutional governance framework must be accessible under government or institutions’ websites. It is unfortunate that Zimbabwe is Open for business mantra faces challenges when it comes to the accessibility of online information. Online websites do not have enough or detailed information for investors to access all investment-related information. Some of the government’s websites do not open hence, investors cannot access much-needed information from these sites. The governance frameworks should speak to section 3(2) of the constitution which speaks to justice, transparency, and responsiveness as factors of good governance. The environment for investment has become opaque as Zimbabwe is ranked low in the ease of doing business due to more time spent on office-to-office documents. In this 21st century where technology is advancing, Zimbabwe has to retool its investment environment by revisiting government websites for accessibility to give investors information from wherever they are.
The global economy through liberalism has pushed developing or less developed countries to the economics of survival as there has been a rise in volatile currency in developing and less developed countries. Volatile currency is another factor that is affecting Zimbabwe is open for business mantra. It is as a result of policy inconsistency in Zimbabwe as the government through the Ministry of Finance and the Reserve Bank of Zimbabwe have been changing policies in a short period of time. The shift from the multi-currency regime to the Zimbabwean dollar (ZWD) has affected a number of investors which has also made investors shun Zimbabwe because of uncertainty in projection of investment using the Zimbabwean dollar. The role of the government in controlling the exchange rate affects investors as their production is now determined by black market dealings. According to the World Trade report (2020), there is no transparency in the auction system which makes it hard for investors to choose Zimbabwe as an investment destination where foreign currency is controlled by the government.
According to Keynesian economics, the government’s role should be of providing a wide range of public goods while the institutionalists highlight that the focus should be on the real world rather than the abstract models of a free market. In Zimbabwe, policymakers deal with abstract and perception rather than reality. There is a need for Zimbabwe to implement the gold standard or adopt the 21st-century digital currency rather than using fiat currency which has failed the global economy since the abandonment of the gold standard. Poor salaries in the security services have led to the rise in armed robberies who are targeting business people. Recently, the minister of Home Affairs told the Zimbabwe Republic Police senior officials that the rise in cases of armed robberies was scaring away foreign investors in Zimbabwe. The role of the government, in this case, must be of providing basic goods and stable salaries to all the working people to reduce the levels of armed robberies. Adam Smith in his book “Wealth of Nations”, states that the government must create an enabling environment to make sure that the market strives. Therefore, the government of Zimbabwe must retreat and create a conducive environment for investment.
The link between politics and the economics of the day cannot be ignored in international relations. The politics of Zimbabwe is affecting the economy as investors remain insecure about political events in Zimbabwe. Political persecutions and political statements by government officials attacking potential countries who have the capabilities to invest in Zimbabwe are of great concern. Constructivists state that values, identity, and history play a major role in international relations. It is in this case that Zimbabwe needs the United Kingdom to revitalize industries as Zimbabwe’s closed industrial tools are of the United Kingdom model. Political unrests noticed in 2018 and 2019 is a clear example of the challenge faced by investors as political demonstrations affected investors through the looting of goods in their shops. The demonstrations were due to the effects of liberal economics which affect ordinary people. The sanctions debate is a result of the national politics and international politics in Zimbabwe as we are living in the world of dependency and interdependency for economic growth.
From the Havana Charter to the World Trade Organization, property-related aspects in investments remain a major concern. Property rights in investments must be protected by domestic laws. According to Hume, the government has the obligation or duty to protect property. Farm evictions have continued even during the second republic’s tenure as farmers are being evicted by powerful political elites. In a globalized international system, evicted farmers’ news has made headlines to the outside world sending a clear message to the mythic investors that property rights are not guaranteed in Zimbabwe. The comments from members of the WTO for Zimbabwe’s trade policy report review indicated the dissatisfaction by western countries on property rights. This area needs attention by allowing investors to enjoy their property rights for economic prosperity. Zimbabwe must be clear on property rights and follow the rule of law as stated in the constitution of Zimbabwe.
However, there are some successes of the policy that may not be ignored. The private and public partnership in doing some investments as well as infrastructure development is complimented. Local investors and those in the diaspora have heard the call of the President “Nyika inovakwa nevene vayo”. A number of developmental projects and investments are taking place throughout the country. These include the building of schools, electrification, the building of clinics, and engaging in the business sector by also contributing to the economy through remittances. Moreover, the programs carried by the government as efforts to address the challenges can be commendable. The Emergency Road Rehabilitation Programme is one of the programs that can benefit Zimbabwe in terms of investment. Road rehabilitation and upgrades can help Zimbabwe to lay a strong foundation for economic growth given that road and air transport plays a major role in connecting trading countries. In line with the regional economic integration through the Africa Continental Free Trade Area, road rehabilitations can be key to unlocking trade routes and linking with other states in the region.
Tax holidays are important in investments for developing countries, as Zimbabwe has implemented it. Tax holidays are governed by tax law and are fiscal measures that are used to attract local and foreign investors. The government of Zimbabwe has given tax holidays to investors in different spheres of the economy especially in the mining sector. Great Dyke Investment was given a five-year tax break as Zimbabwe Investment Development Agency has a role to play in crafting the best tax holidays to attract investors as mandated by the attendant Act. The issue of tax holidays needs to be implemented in a transparent manner so that the citizens know-how and who is granted tax holidays as well as how do they benefit them. Zimbabwe has been moving in the right direction in granting tax holidays, however, the government has to be transparent and critically evaluate the performance of those who require tax holidays.
In conclusion, As the policy is getting attention, a number of issues still need to be addressed for it to successfully achieve its objectives. Zimbabwe should adopt a digital currency or join the Rand Union for investment and trade to thrive in this liberal international politics. There is a need to adopt current technological advancements and upgrade the government websites for investors to get more information online in order to reduce office to office delays. Zimbabwe should also reform the way it does its politics as the national politics of the day have been influential to the international politics for Zimbabwe leading to investment uncertainty. There is also a need to negotiate new Bilateral Investment Promotion and Protection Agreements (BIPPAS) and Bilateral Investment Treaties (BITs) to be in touch with both the current global economic needs. In addition, Zimbabwe has to join some international initiatives that promote economic growth through trade and investments. The World Trade Report comments for Zimbabwe should be taken into consideration as it sends a clear picture of Zimbabwe’s business environment. The implementation of the above issues may help Zimbabwe to witness the fruits of Zimbabwe is open for business mantra for Vision 2030 to be a reality.
This paper is an opinion piece written by By Ray Masuku. A holder of a B.Sc. Hons degree in Political Science and is currently studying MSc. International Trade and Diplomacy at the University of Zimbabwe. He can be contacted via his email email@example.com.