Milestone refinements to investment laws
APPLICATIONS for investment licences will now be processed within five days, while all foreign direct investments become legally binding and immune to compulsory expropriation and nationalisation, our Harare Bureau has established.
In a comprehensive overhaul of the country’s investment architecture being undertaken by Government, authorities have drafted a law streamlining the investment licence application process while removing cumbersome bureaucratic procedures.
Investors will also be allowed to freely repatriate profits and income from investments to their source countries with minimum hindrance. Currently, it takes in excess of a month for a potential investor to acquire relevant regulatory licences and certifications from different Government agencies and departments, a process that is also often encumbered by corruption.
Further, the absence of a binding legal guarantee against expropriation and nationalisation has amplified investors’ reluctance to establish enterprises locally, a situation that was compounded by indigenisation regulations.
The Zimbabwe Investment Development Agency Bill, which is set for tabling in Parliament when Parliament resumes sitting at the end of the month, will streamline investment application regulations while integrating Government agencies responsible for new investments under one roof.
The Bill, exclusively obtained by our Harare Bureau, seeks among other things to create a multi-disciplinary investment centre housing all entities facilitating licensing, establishment and operationalisation of investments.
The Bill provides for the immediate repealing of the Zimbabwe Investment Authority Act, the Special Economic zones Act and the Joint Venture Act, which will all be housed under the Zimbabwe Development Agency (ZIDA).
In addition, licensing arms of agencies including the Zimbabwe Revenue Authority; Environment Management Agency; Reserve Bank of Zimbabwe; Companies Office; National Social Security Agency; Zimbabwe Energy Regulatory Authority; Zimbabwe Tourism Authority, State Enterprises Restructuring Agency and some Ministry departments will be integrated under ZIDA.
The proposed law, which is part of the ease of doing business reforms being undertaken by Government, compels ZIDA to process licence applications within five days and offer immediate service to all potential investors.
Reads the Bill in part: “All applications submitted to the Agency in terms of section 21 shall be submitted to the investment technical working group for consideration and recommendation to the chief executive officer. The Agency shall within five working days approve or refuse to approve any application for an investment licence submitted in terms of section 21.”
Under the current legal regime, an investor is required to apply for an investment licence at ZIDA for US$500 and subsequently pay an additional US$2 500 for the licence upon approval of the licence, in a process that takes up to five days. The Registrar of Companies facilitates name search and company registration and charges US$145, which varies according to share capital.
The Exchange Control Division of the Reserve Bank of Zimbabwe also vets the investor for free and requires up to seven days to conclude the vetting. The Immigration Department processes an investor’s residence permits for US$500 and this takes up to 21 days.
For investors whose applications have been approved, the Immigration Department also processes work permits for US$500 in not more than 21 days.
Zimra registers tax clearance at no charge and this takes up to two days or five minutes if done online. Nssa registers social security at no charge in a process that is completed inside 24 hours. Ema conducts an Environmental Impact Assessment (EIA) Certificates which cost US$139 in 10 days although the Act says it should be done in 20 days. Cost of the EIA varies according to scale of the project and can go up to US$2 million.
The Bill also guarantees protection of investments against nationalisation, which always loomed large during the days of indigenisation. Reads the proposed regulation; “(1) No – (a) Investment shall be nationalised or expropriated; and
(b) Investor shall be compelled to cede an investment to another person, either directly or indirectly through measures having effect equivalent to nationalisation or expropriation; 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.”
The law also seeks to ensure that investors do not face difficulties when they intend to repatriate their profits to their countries of origin.
On transfer of funds it says: “(1) With respect to investments made under this Act, investors may without restriction or delay in freely convertible currency transfer the following funds into and out of Zimbabwe –
(a) Contributions to capital, such as principal and additional funds to maintain, develop or increase the investment;
(b) The proceeds, profits from the asset, dividends, royalties, patent fees, licence fees, technical assistance and management fees, shares, and other current income resulting from any investment under this Act.”
In terms of the proposed law, the President will appoint the chief executive who will wield extensive authority including signing off investment licences. The board, which shall be appointed by the responsible minister should include three individuals selected from the private sector who hold extensive international experience and exposure in major investment institutions.
The Bill also provides for non-discrimination of potential investors from foreign countries. The proposed Bill reserves 12 sectors for locals which include, transportation, retail and wholesale trade; barbershops and beauty salons; employment agencies; valet services; bakeries; grain milling; tobacco grading; advertising agencies; artisanal mining; and local art marketing and distribution.