By Ndafadza Madanha
GOVERNMENT’s vigorous effort to lure Foreign Direct Investment (FDI) under the “Zimbabwe is open for business” mantra has unnerved local businesses who fear the new thrust could sink the economic empowerment agenda.
Local business fear if government successfully lobbies international business to invest in the country they will be caught flat footed as the bulk of them have not retooled and are still to reap full dividends of the various protectionist policies put in place by the previous regime.
Business has called upon government to ring fence their gains in the Indigenization and Economic Empowerment Act and direct FDI to sectors that are capital intensive such as mining and agriculture.
“We have a fallacy that says FDI is the panacea to our problems, we do not dispute that FDI is important but we need to direct it to areas that deserve. We need to promote the economic empowerment agenda for the local people. We cannot have foreigners coming to set businesses in areas such as bottling water and selling trinkets is this the investment we want. So government should be clear that the economic empowerment agenda of the locals regardless of colour is protected,” said Anthony Mandiwanzira of Chief executive of Dairibord Zimbabwe.
The departed regime of President Robert Mugabe had promulgated a number of statutory instruments to protect the local industry from the influx of foreign goods which had crippled local operations.
In the year 2016, Zimbabwe gazetted Statutory Instrument 64 of 2016 (SI 64) which required traders to obtain an import licence from the then Ministry of Industry and Commerce for such items as coffee creamers, bottled water, white petroleum jellies and body creams, canned fruits.
Other items on the list were vegetables, peanut butter, plastics pipes and fittings, builders-ware products, metal clad insulated panels, baked beans, cereals. SI64 was later upgraded to SI122 last year.
The SIs had two objectives reducing consumer spending on luxury imports thereby reducing the trade deficit and industrialise by import substitution, and promote buy local.
Consequently the protectionist approach had resulted in an upsurge in capacity utilization of firms manufacturing commodities protected under the Statutory Instrument with some companies recording capacity utilization of over 80 percent from 10 percent before the SI.
Confederation of Zimbabwe (CZI) president Sifelani Jabangwe, said government should avoid giving preferential treatment to foreign investors at the detriment of the local industry.
“We need to avoid giving preferential treatment for investors that are coming as this hurts the established local business, every country as empowerment regulations for instance South Africa or Botswana and we need to bring clarity to ours. As the country opens up for business up most of the FDI will be directed to extractive industry so opportunity for value addition players is there”.
The new regime of President Mnangagwa has retracted major components of the controversial Economic and Empowerment Act which required indigenous Zimbabwean to own the majority stake in all business entities.
Majority ownership is now restricted to two minerals namely diamond and platinum.