Unstable exchange rates, uncertain property rights biggest drawbacks for UK investors in Zim: Ambassador Robinson

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Unstable exchange rates, uncertain property rights biggest drawbacks for UK investors in Zim: Ambassador Robinson

Vice President and Minister of Health and Child Care Dr Constantino Chiwenga at his Kaguvi offices in Harare handing over his book to the British Ambassador to Zimbabwe Melanie Robinson after she had paid a courtesy visit in December. Picture Courtesy (By Justin Mutenda: The Herald)

“It is my job to try and encourage UK investors into Zimbabwe. In terms of stock, UK is the biggest investor in Zimbabwe. I should say clearly that the one thing they (investors) never mention are targeted sanctions. It has no bearing at all (on their decisions),” said the British Ambassador.

Fitzgerald Munyoro
THE unstable and unpredictable foreign currency exchange rates in Zimbabwe and uncertainty of property rights are the biggest barriers to improving prospects of more British investment in Zimbabwe, Easterntimeszim has learnt.

This was said by British Ambassador to Zimbabwe Melanie Robinson during an online interview last week Friday on ‘Assessing Britain-Zimbabwe relations in the New Dispensation,’ which was hosted by the British Embassy. She said the frosty trade relations between Zimbabwe and the United Kingdom were not because of the targeted sanctions imposed on Zimbabwe as perceived.

The British Ambassador to Zimbabwe said the major challenge faced by potential investors from the United Kingdom (UK) whom she has been in contact with was towards uncertainty of foreign exchange rates and the double pricing in the country through black market foreign exchange rates. The black market exchange rate occurs when the official rate bears little or no relationship to the currency’s actual value.

Ambassador Robinson also cited the stringency of the banking system as another red flag investors think through when considering Zimbabwe as an investment option. “It is my job to try and encourage UK investors into Zimbabwe. In terms of stock, UK is the biggest investor in Zimbabwe. I should say clearly that the one thing they (investors) never mention are targeted sanctions. It has no bearing at all (on their decisions),” she said.

Ambassador Robinson

Adding, “There are three things really that they always mention. The first of the problems is with the money (currency). To be able to repatriate their profits, to know that they can access foreign currency easily into Zimbabwean dollars (ZW). The fact that there are two exchange rates and there is such a gap between them and you don’t know when you get your money and how long you may have to wait, maybe six weeks. All of this makes an incredibly difficult environment for investors,” she said.

Ambassador Robinson who prior her Ambassadorial appointment to Zimbabwe in 2019 was Executive Director for the UK at the World Bank Group in Washington from 2015 to 2018, also raised the issue of property rights as another impediment to investment in Zimbabwe by UK businesses.

“They do worry about property rights as we have British businesses in Zimbabwe that unfortunately to this day struggle to have their property rights upheld. It might be a mine for example, where they have got miners on their property and they are not able to deal with that. It is fundamental that investors need not to really own land or at the least lease it and have some legal standing in the certainty of that lease,” she said.

Although currently there are no restrictions on foreign ownership in Zimbabwe through Section 71 (2) of the Constitution that provides that every person shall have the right to own all forms of property, it is policy inconsistency that remains the biggest worry for most foreign investors. Government has in the past willy-nilly changed policies to suit certain political agendas, like the controversial Indigenization policy which was eventually repealed in 2019.

Through the Companies and Business Entities Bill, foreign firms are now able to set up operations without adhering to the 51-49 percent shareholding enforced through the Indigenization and Economic Empowerment Act. To establish a business in Zimbabwe, foreign investors are now simply required to lodge with the Minister a copies of  constitutive documents, a list of directors resident or to be resident in Zimbabwe and if it is a subsidiary, the name of its holdings company, Clause 228 of Chapter III of the New Companies Bill states.

The issue of lack of accountability and corruption also came to light as a major drawback that has worsened trade relationships between Zimbabwe and UK. “The rule of law needs to be upheld, court orders are ignored and investors cannot operate in such an environment. You might think you are coming here as a foreign investor to bid on a contract or think you are going through a reasonable process when suddenly something else happens and a bidder that wasn’t even in the process gets the contract. The level of corruption in finance makes for a very unstable and difficult environment for people to work in,” said Robinson.

On the other hand Zimbabwe currently owes US$1.2bn in arrears to the World Bank, African Development Bank and European Investment Bank.

Historically, Zimbabwe and Britain shared a cordial relationship but the relationship turned sour due to the land reform program. United States of America imposed sanctions on Zimbabwe through the Zimbabwe Democracy and Economic Recovery Act in 2001. ZDERA restricts US support for multilateral financing to Zimbabwe because of the 2000 land reform programme orchestrated by the late former President Robert Mugabe. The land reform saw indigenous blacks reclaiming back land from white commercial farmers.

The relationship looked optimistic following Mugabe’s ouster in 2017, however things seem to be worsening in light of what Britain has reportedly termed ‘half-hearted attempts at reform’ by the President Emmerson Mnangagwa led government. The Zimbabwean Government also continues to blame sanctions for the country’s economic despairs.

To make matters worse, on February 1, the UK announced placing four Zimbabwe security bosses on the sanctions list for human rights violations. In a statement, the UK Foreign Secretary Dominic Raab said the sanctions seek to encourage the government to stop the repression of civil society and to respect human rights. “These sanctions send a clear message that we will hold to account those responsible for the most egregious human rights violations, including the deaths of innocent Zimbabweans,’ read part of the statement.

The sanctions which include travel bans and asset freezes were slapped on the State security Minister Owen Ncube, Central Intelligence Organisation director general Isaac Moyo, Zimbabwe Republic Police Commissioner General Godwin Matanga and Anselem Sanyatwe, a former Brigadier General who commanded the Presidential Guard.

The officials were accused of responsibility for the deaths of 17 Zimbabweans in January 2019, when the army attacked protesters marching against a hefty fuel price hike and were were also allegedly complicit in soldiers opening fire on unarmed demonstrators who were protesting against a delay in election results in August 2018, killing six.

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