PRESENTATION ON INVESTMENT OPPORTUNITIES IN ZIMBABWE ZIMBABWE DIASPORA INVESTMENT CONFERENCE: LONDON

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PRESENTATION ON INVESTMENT OPPORTUNITIES IN
ZIMBABWE ZIMBABWE DIASPORA INVESTMENT
CONFERENCE LONDON 26/09/09

• BY
• RICHARD MBAIWA
• CHIEF EXECUTIVE OFFICER
• ZIMBABWE INVESTMENT AUTHORITY

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About Zimbabwe Investment Authority (ZIA)

• Statutory Body established by Act of Parliament.
• To promote, facilitate and coordinate investment
  by domestic and foreign investors in Zimbabwe.
• One-Stop-Shop for Investors in Zimbabwe.
• To advise Government on investment policy and on
  all matters relating to investment in Zimbabwe so
  as to enhance the development of the economy.

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The Relationship Between Economic Growth Rates
And Investment (S0urce MOF)
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Comparative FDI Inflows (USDM) (Source UNCTAD
WIR, 2009)
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Why Low Levels of Investment in the Past

• For a long time Zimbabwe has been getting poor
  ratings from institutions such as World Bank and
  World Economic Forum on the Doing Business Index.
• The following were identified as the most
  problematic factors
• Forex regulations
• Inflation
• Policy instability
• Govt. Instability
• Inefficient Govt. Bureaucracy
• Inadequate Infrastructure
• Corruption
• Access to Financing

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STERP and Investment Promotion

• STERP recognises the need to stimulate investment
  so as to underpin sustainable economic growth and
  development.
• The objective as stipulated in STERP is to
  increase investment capacity as a percentage of
  GDP from 4 to 25.
• It has been noted that there is a direct
  correlation between the levels of investment and
  economic growth as measured by GDP.

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Role Of Zimbabwean Diaspora In Econ. Dvpt.

• Diaspora Participation in Development is one of
  the key strategic areas identified by Government
  and other players like IOM for economic
  development.
• STERP prioritises FDI as critical for Zimbabwes
  economic recovery.
• Highlights that non resident Zimbabweans will
  play a pivotal role in that regard.

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ZIA Investment Approvals 2009

• Significant increase in number of investment
  enquiries and project approvals since launch of
  inclusive government.
• A number of international investment conferences
  held in Zimbabwe have been well attended by both
  local and foreign investors.
• This interest still to be translated into actual
  investment but some investment is expected to be
  realised from it over the next year.

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Major Sources And Sectors of Investment

• LEADING SECTORS
• Mining
• Manufacturing
• Tourism
• Services-construction, consultancy

• LEADING COUNTRIES
• Asia
• China
• Pakistan
• India
• Africa
• Mauritius
• South Africa
• Kenya
• Nigeria
• Europe
• UK (BVI)
• Americas
• USA
• Canada

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Developments in the Investment Environment

• Inflation reduction as a result of introduction
  of multiple currencies and removal of price
  controls.
• Relaxation of exchange controls and removal of
  foreign currency surrender requirements.
• Partial liberalisation of the capital account
  where authorised dealers process transactions up
  to US5 million for the remittance of capital
  appreciation, profits and dividend income without
  exchange control approval
• ZIA being transformed into a OSS so as to remove
  bottlenecks.
• Investment policies and legislation being
  reviewed to make them more favourable to
  investment

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Priority Sectors For Investment

• Manufacturing
• Transport and logistics
• ICT and knowledge based industries
• Energy
• Infrastructure
• Mining
• Tourism
• Services and Distribution

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Manufacturing Sector

• In February operating capacities in the sector
  were below 10, now between 20-30
• Target is to reach 60 by year end.
• Challenge on the ground is access to funding for
  recapitalisation and working capital
• Provides an opportunity for diasporans to invest
  in such ventures through JVs.

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Manufacturing

• Agro-processing, Food manufacturing, mfr of
  industrial textiles and clothing.
• Automotives interiors, engine parts/components,
  body parts and other spare parts.
• Capital equipment-recapitalisation of foundries,
  manufacture of tool dies and moulds, machine tool
  manufacture
• Packaging and printing

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Transport Logistics

• Urban transportation, road haulage
• Intercity railway expansion and refurbishment of
  NRZ network(US274m).
• Airlines-recapitalisation of our national.
  airline (US750m).
• Bonded warehousing facilities.
• Freight forwarding and Clearing.

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Energy

• Rehabilitation of Kariba hydro power station and
  Expansion of the Hwange thermal power
  station(US900m).
• Recapitalisation of Hwange Colliery (US160m)
• Other mini hyrdo plants development
• Alternative energy sources- solar, wind, bio
  fuels.
• Methane Gas.

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ICT and knowledge based industries

• Software development
• Business process outsourcing
• Data storage area networks
• Integrated Solution planning
• Hardware assembly
• Multimedia development
• Film industry and graphics
• Rural communications
• Call Centres

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Infrastructure

• Health care infrastructure as well as modernising
  existing health care facilities.
• Industrial park development
• Modernisation and expansion of major road
  networks
• Telecommunication infrastructure
• Waste management works
• Water treatment plants
• PPPs

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Mining

• Major minerals resources in Zimbabwe

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Mining contd

• Mining sector suffered extensive closures in the
  past.
• A lot of the closed mines have huge mineral
  potential
• Ministry of Mines have a database of these.
• Potential area for investment to resuscitate the
  mines.
• Opportunity to start new mines.
• Beneficiation of Minerals.

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Tourism

• Development of modern convention centres.
• Development of resort facilities.
• Modernisation of existing hotel facilities and
  Development of new hotels in all the major cities
  and resort areas.
• Self catering holiday resorts development
• Rehabilitation of existing golf course facilities
  and construction of new ones.

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Tourism contd

• Opportunities ushered in by the 2010 World Cup
• Opportunities to participate in the upgrading of
  the accommodation facilities by becoming
  shareholders and injecting capital into
  enterprises.

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Agriculture

• Primary production of food and cash crops.
• Horticulture
• Production of irrigation equipment
• Greenhouse construction materials production
• Contract farming

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Services

• Retail and Distribution Operations.
• Specialist Services such as medical and dental
  practices, legal practice, accounting and
  secretarial services, consultancy services.
• Construction
• Franchises

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How Zimbabweans in Diaspora can Invest

• Establish new companies to invest in Greenfield
  projects.
• Enter into joint venture partnerships with
  existing companies looking for funding to
  increase their capacity utilisation.
• Enter into JVs with foreign investors and invest
  in some of the sectors identified above.
• Buy existing troubled companies.
• Buy shares on the ZSE
• Pool together resources and invest in small,
  medium and large enterprises including
  infrastructure projects.

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Challenges

• Access to Project Financing
• Lack of Liquidity in the Market
• Inadequate infrastructure and other investment
  enablers such as power, water and
  telecommunication facilities.
• Management and technical expertise

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Taxation in Zimbabwe

• Corporate Tax Rate 30
• Capital Gains Tax 20
• Shareholders Tax on Dividends
• Listed Shares 15
• Unlisted Shares 20
• A number of fiscal incentives are available to
  investors

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Fiscal Incentives

• Growth Point Areas Taxed At
• New Manufacturing Projects 10
• New Infrastructure Projects 15
• For first five years
• BOOT and BOT Arrangements
• First Five Years 0
• Next Five Years 15
• Third Five years 20
• Thereafter 30

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Fiscal Incentives contd.

• Industrial Park Developers
• 1st Five Years 0
• Thereafter 10
• Taxable Income Of A Tourist Facility In An
  Approved TDZ
• 1ST Five Years 0
• Thereafter 15

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Incentives

• Taxable income from a manufacturing or processing
  company, which exports 50 or more of its
  products - 20
• Taxable income of holder of special mining lease
  25
• Taxable income of company or trust derived from
  mining operations 15

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Conclusion

• Some nationalities such as Nigerians, Chinese,
  Pakistanis and Indians are taking the plunge and
  investing in Zimbabwe across all sectors.
• What is the attraction? High returns.
• Now is the opportune time to invest in Zimbabwe.
  Zimbabweans in the diaspora should seriously
  consider participating in the economic
  development of their country.
• As ZIA we are there to help you navigate and
  explore the investment opportunities.

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The End

• Thank You
• Tatenda
• Siyabonga