Zimbabwe needs to emulate UAE
LAST month, two important things happened — one inside Zimbabwe and the other in the United Arab Emirates (UAE).
While these happened in different jurisdictions, they all have a huge bearing on Zimbabwe and its potential to attract enough foreign capital to grow the country’s troubled economy.
Last week the UAE authorities allowed foreign nationals to acquire 100 percent ownership in local companies — after scrapping a law which previously restricted investment beyond 49 percent by international investors. Two weeks ago, Zimbabwe unveiled the National Development Strategy 1 (NDS1) as the country’s new economic blueprint for the next five years.
The NDS1 is the successor to the Transitional Stabilisation Programme (TSP) which was launched in October 2018 by Finance minister Mthuli Ncube. Developments in the UAE serve to underline the seven Emirates — Abu Dhabi, Dubai, Sharjah, Ajman, Umm Al-Quwain, Fujairah and Ras Al Khaimah — as powerful magnets for drawing international investors.
The amended law paves way for investors to create or buy companies without the need of belonging to a certain nationality. Although the new law does not extend into areas either wholly-owned by federal or local governments or their subsidiaries, it is seen as further underlining the UAE and its business hubs — Dubai and Abu Dhabi — as business destinations of choice.
How does this impact Zimbabwe?
Zimbabwe is increasingly doing business with the UAE — including opening diplomatic and trade missions between the two entities — as part of deepening those economic ties. It is expected that President Emmerson Mnangagwa’s government should benefit from having countries such as UAE among its friends who implement policies that enrich their economies and people.
What has happened in the UAE is particularly important for Zimbabwe because foreign investors still don’t know what to make of its economic policies and laws such as the Indigenisation and Empowerment Act, which has had shareholding thresholds in the mining sector scrapped. Investors remain jittery as these are yet to be regularised into law.
It must be noted that the removal of the indigenisation law is meant to attract investors but the inertia accompanying regularisation will continue to peeve investors.
What Zimbabwe needs at the moment are clarity and protection of foreign investors to make sure that the country realises its economic growth in the next five years as being sought by NDS1.
Foreign direct investment would also help the NDS1 achieve its ambitious target of creating 76 000 new jobs in the formal sector.