Africa

Screenshot 2020-04-03 at 1.43.28 PMBy George Gapus, Scanlen & Holderness Legal Practitioners

 

 

On February 7, 2020 the Zimbabwe Government gazetted the long-awaited Zimbabwe Investment and Development Agency Act (Chapter 14;37). The new law comes in against the backdrop of promoting the ease of doing business in the country. Zimbabwe currently ranks 140 on the World Bank ease of doing business index and it is hoped that the new law will remove some of the red tape and bottlenecks impeding investment in the country. The major objectives of the law are to promote and facilitate investment in the country.

The law establishes a One Stop Investment Services Centre (OSISC). This will be presided over by the Zimbabwe Investment and Development Agency (ZIDA) whose functions include investment promotion and coordination, assisting investors and facilitating entry and implementation of investment projects.

The OSISC will have desks for all the relevant government departments dealing with investment.

The law provides for non-discrimination between foreign and domestic investors save for reserved areas. Similarly, foreign investors from different countries shall be accorded equal treatment save for resolution of investment disputes provided for in international investment treaties and trade agreements.

Section 16 of the Act provides for fair and equitable treatment of investors. No investor shall be denied justice in criminal, civil or administrative proceedings in the country. Every investor shall be entitled to protection against breaches of “fundamental due process” which includes substantial procedural delays, breaches of transparency, substantive changes to conditions and terms of licences, manifest arbitrariness, targeted discrimination on manifestly wrongful grounds and abusive treatment of investors.

Section 17 of the Act provides guarantees against expropriation of investments. Investors will be pleased to note that the law protects against nationalisation and direct and indirect expropriation of investments. It also provides that no investor shall be compelled to “cede” an investment to any person, “except for a public purpose, in accordance with due process of law, in a non-discriminatory manner and on payment of prompt, adequate and effective compensation”. In the event of expropriation, the compensation shall be equivalent to fair market value. These guarantees are significant in Zimbabwe given the compulsory land nationalisation programme with no compensation for the land value at the turn of the century and the indigenisation programme started in 2007 which affected all sectors of the economy until the programme was substantially watered down in 2017.

In a move that will encourage investors, the new law provides for the rights of investors to freely transfer funds without restriction or delay in a freely convertible currency into and out of Zimbabwe with respect to the following:

  • contributions to capital;
  • proceeds, profits from the asset, dividends, royalties, patent fees, licence fees, technical assistance and management fees, shares and other current income resulting from investment under this Act;
  • proceeds from the sale or liquidation of any investment;
  • payments made under a contract entered into by the investor including payment pursuant to a loan agreement;
  • payments resulting for the settlement of investment disputes; and
  • earnings of foreign personnel legally employed in Zimbabwe.

An investor is free but not required to apply to the Agency for an investment licence for an existing or planned investment. It is mandatory for investors in special economic zones to apply for investment licences. A holder of an investment licence is entitled to priority treatment by government officers when applying for any permit, licence concession or other authorisation. Investment licences are not transferrable except with the prior approval of the Agency.

The Act provides for the establishment of special economic zones which shall be published in the Government Gazette. It also stipulates the considerations to be taken into account by the Agency when considering applications for investment licences in these zones.

The Act repeals and consolidates the following investment regulatory statutes;

  • the Zimbabwe Investment Authority Act (Chapter 14;30);
  • the Special Economic Zones Act (Chapter 14;34); and
  • the Joint Ventures Act (Chapter 22;22).

The Joint Ventures Unit established under the Joint Ventures Act has been transferred to the Agency and renamed the Public Private Partnership Unit of the Agency. The Act regulates the manner in which Public Private Partnerships are entered into.

In accordance with the government mantra that “Zimbabwe is open for business”, Zimbabwe has shown serious political will to implement the reforms in the investment sphere. The infrastructure for the establishment of the One Stop Investment Services Centre is already in place at the ZIDA offices at ZB Life Towers in central Harare. One hopes that the Agency will demonstrate the efficiency and effectiveness envisaged in the Act when implementing the new law.

____________________________

LEX Africa is an alliance of law firms formed in 1993 and with over 600 lawyers in 26 African countries. www.lexafrica.com.

____________________________

Screen Shot 2018-03-13 at 1.28.45 PM

 

 

 

 

W: www.lexafrica.com
E: gapug@scanlen.co.zw
T: (263) 4 702 561-9

Related Articles by Firm
Africa: The effect of Covid-19 and business resilience
Companies worldwide are, or will inevitably be, affected in the short and medium-term by the coronavirus pandemic (Covid-19). Decline in commodity prices due to the falling demand in China, travel restrictions ...
Africa: Community issues and resource nationalism adding pressure on the mining industry
As if mining by its very nature is not difficult enough from a technical, financial, environmental and labour point of view ...
Opening the money taps into Africa
Akinwumi Adesina is not a name most people in Africa would recognise, yet it belongs to a man who is, arguably, doing the most to haul the continent out of a rut of underdevelopment and improve the lives of its ...
Coal-driven power train is running out of steam
The African Development Bank that it is making a surprise policy turn away from fossil-fuel investment and ploughing a new renewable energy path ...
Sun, wind and water stir up Africa’s energy mix
Obstacles to faster development of green energy abound everywhere, but the trend is clear and the momentum unstoppable.
Africa: Guinea emerging from the shadows
Recent reports from three respected international organisations sketch a relatively upbeat picture of economic prospects in the west African state of Guinea ...
AFRICA: How Nigeria is going local
Promoting “indigenisation” in the Nigerian economy was the subject of a recent Lex Africa seminar, which asked how foreign investors were forging partnerships with local players, using local content and local manufacturing capacity and transferring valuable work skills ...
Local content and participation in Ghana’s electricity supply industry
In line with the national push for a more structured approach to increasing local content and participation, the Regulations came into force on December 22, 2017 ...
One small step for Africa
On April 2 the Gambia’s parliament wrote itself into modern African history when it ratified the Africa Continental Free Trade Agreement (AfCFTA) ...
Zimbabwe’s ratification of the WTO Trade Facilitation Agreement
Recently, Zimbabwe, a member of the WTO since 1995, ratified the WTO Trade Facilitation Agreement (TFA) becoming the 139th WTO Member State to ratify this Agreement ...
African competition law developments in 2018 and the outlook for 2019
Africa is sometimes described as the “last frontier” of competition law because many African countries have only recently adopted modern competition laws ...
Blockchain, cryptocurrencies and the law in Uganda
By far the most significant headline-grabbing development in 2017 and 2018 relates to the stunning rise of blockchain ...
Tanzanian government releases Microfinance Bill
In a bid to ensure proper licensing, regulation, monitoring and supervision of microfinance business in Tanzania, the Minister for Finance has issued a draft Bill on Microfinance to be tabled in the National Assembly very soon ...
Ethiopia’s arbitration law challenges
Arbitration is perceived as one of the alternative solutions to congestion in the court system ...
Developments in competition law in Africa
At LEX Africa’s June seminar on developments in competition law in Africa, speakers discussed the increasing trend of governments to try and use competition law as an important part of their industrial policy ...
Zimbabwe holds massive potential for private equity investors
The country’s infrastructure is broken, but there is room for smart investors to capitalise on its rehabilitation.
Impact of the amendment of the Legal Guarantee of Stability in respect of existing mining projects in the DRC
The Government of the Democratic Republic of Congo (DRC) commenced the review process in respect of its Act No. 007/2002 of July 11, 2002 on Mining Code (Mining Code) in 2012. The process eventually culminated in the promulgation by the President of the Republic ...
Mozambique is addressing economic reform in a big way in 2018
Significant strides in Mozambique’s legislation and policies could see a rapid turnaround in the country’s economic situation. In 2016, inflation peaked at 26 percent ...
Increasing importance of African regulatory issues for M&A, trade and investment
It is important to remember that Africa is not a country but consists of 54 sovereign states and a huge diversity of cultures, customs, languages, ethnic groups and religions ...
Related Articles
Covering Ears to Steal Bells: Ignoring insolvency at risk of liquidation
The closest Chinese equivalent to the English idiom of ‘sticking one’s head in the sand’ is ‘covering one’s ears to steal bells’ ...
JV Compliance Issues during the Transition Period under the new FIL
On 1 January 2020, the Foreign Investment Law of the People’s Republic of China came into force ...
Related Articles by Jurisdiction
Public private partnerships in Tanzania
PPP's: an update following the Finance Act 2014
FDI laws in Libya
A stark reminder of the fluidity of the legal and practical landscape ...
The Canadian insurance M&A environment
There have been a significant number of insurance company M&A transactions in the Canadian market in recent years, a trend expected to continue. Fasken Martineau DuMoulin have surveyed the acquisition agreements from these transactions and analysed ...
Latest Articles
Watch again: “Is Covid-19 taking women lawyers’ careers back to the 1950s?”
A second chance to watch….. the opening Women In Law Dialogue Series Webinars: Asia and North America time-friendly (first aired ‘live’ in August 2020) ...
Covering Ears to Steal Bells: Ignoring insolvency at risk of liquidation
The closest Chinese equivalent to the English idiom of ‘sticking one’s head in the sand’ is ‘covering one’s ears to steal bells’ ...