Zim gazettes 258 SIs in 2019 alone
THE Zimbabwe Government, last year gazetted over 250 Statutory Instruments (SIs) as a way of economic management yet it has become a threat to investment, Chris Mugaga, Zimbabwe National Chamber of Commerce chief executive said.
Addressing participants at the Employers’ Confederation of Zimbabwe symposium recently, Mugaga said it had become difficult to attract foreign direct investment in Zimbabwe because of the constant changes in legislation.
“These delegated legislations; they come through in the form of SIs and from January 2019 to December 2019, we are talking of 258 SIs in one year, these rear-view economics are not good for foreign direct investment,” Mugaga said.
Government last year issued a raft of statutory instruments to give effect to the new monetary reforms which began in 2018.
In February 2019, two legal instruments, that gave impetus to the introduction of the ZWL$ were gazetted; SI 32, The Exchange Control Regulations (Amendment) and the Presidential Powers (Temporary Measures) for (Amendment) of the RBZ Act and RTGS Electronic Dollars Regulations of 2019, SI 33. The statutory instruments meant that the RTGS$ would be legal tender in Zimbabwe though they do not prohibit the use of multiple currencies adopted in 2009.
The most popular SI, was SI 142, when Zimbabwe woke to news of a statutory instrument that completely altered the currency landscape. This instrument was followed by further directives from the Reserve Bank of Zimbabwe.
The ZWL$ became the sole legal tender in any transaction. All other currencies were no longer legal tender and cannot be used in settlement of obligations.
“The major problem in Zimbabwe is that we see a lot of the knee jerk economics/reaction and it is showing the lack of policy consistency and well thought out policy measures, some of the measures obviously could be a weaker private sector that is wrongly advising government, it could be poverty because at times when one attempts to have pro-market policies in an economy like Zimbabwe with poverty levels of above 75 percent, they are bound to reverse some of these policies.”
“Lastly, it is the challenge of a not so independent legislature because when you have a legislature that votes on party lines, Parliament will not oppose such legislations because they vote on party lines and the majority will always support the legislation,” Mugaga said.
In its Equity Strategy report for 2020, IH Securities concurs with Mugaga that government’s unpredictability of economic policies, will continue to undermine foreign investment.
Whilst FDI inflows to Sub-Saharan Africa (SSA) have increased significantly, Zimbabwe has not benefited much from this boom.
“It is our view that the unpredictability of the government’s economic policies, foreign currency allocation and the unstable political and economic climate will continue to undermine foreign investment. A great deal needs to be done to restore investor confidence, including concrete legal steps to protect FDI, such as an investor-state dispute settlement mechanism backed by international treaties and political commitment to honouring them,” IH Securities said.