Objective Capital's Africa Resources Investment Congress 2011 Ironmongers' Hall, City of London 14-15 June 2011 Day 2: Focus on Zimbabwe Speaker: Hon. Tapiwa Mashakada, MP - Republic of Zimbabwe

1. AFRICA RESOURCES
INVESTMENT CONGRESS
Revitalising the economy & encouraging
inward investment
Hon. Tapiwa Mashakada – The Minister of Economic Planning and
Investment Promotion, Republic of Zimbabwe
IRONMONGERS’ HALL, CITY OF LONDON ● TUESDAY-WEDNESDAY, 14-15 JUN
2011
www.ObjectiveCapitalConferences.com 1

2. ZIMBABWE INVESTMENT FOCUS DAY:
2
15 JUNE 2011
“INVESTMENT OPPORTUNITIES AND DOING
BUSINESS IN ZIMBABWE”
Presentation by
The Minister of Economic Planning and Investment
Promotion, Hon T. Mashakada
ministereconomicplanning@yahoo.com

3. Presentation outline
3
 Ministry’s Mandate
 Zimbabwe in Brief
 Why Invest in Zimbabwe and Overview of
Opportunities by Sector
 Taxation and Incentives
 Doing Business Indicators
 Reform Agenda; One-Stop-Shop Establishment and
Objectives
 Investment Process Under OSS
 Way Forward

4. Ministry’s Mandate
4
 Design and coordinate investment polices and incentives to make Zimbabwe
an attractive investment destination.
Lead the process of developing and implementing an economic recovery
strategy and plan. E.g Medium Term Plan
Co-ordinate and lead the national economic development planning
process, including the formulation of provincial plans and programmes.
Co-ordinate the development of national priorities that inform the annual
budgetary process and national programmes.
Conduct macro-economic policy analysis and research on the performance
of the economy and provide the necessary policy guidance to all the
sectors.
Monitor and evaluate the performance of economic sectors and in
conjunction with relevant ministries, recommend appropriate policy
intervention.

5. Zimbabwe in Brief
Strategically Located at the Centre of Southern
•
Africa
• Total Area: 390 757 square kilometers
• Land : 386 670 square kilometers
• Water: 4 087 square kilometers
Border Countries: Botswana, Mozambique,
•
South Africa, and Zambia
• Capital City: Harare (Population 1.6 million)
• Official Language: English
•Climate: 12 - 13°C in winter and 24°C in
summer.

6. People
 The country’s greatest asset is its people
 Friendly
 Well Educated (90% Literacy Rate)
 Both Skilled and Semi-skilled labour easily available
 Population: +/- 12 million
 Annual population Growth: 1.1%

7. Why Invest in Zimbabwe
7
 Highly skilled and literate Workers
 Centrally and strategically Located in the Southern African Region
 Regional gateway (North-South Corridor)
 Regional logistics hub supported by infrastructure such as railways,
roads, power, telecoms.
 Natural resources endowment
 Diversified economy – manufacturing, services, agriculture, mining
and tourism
 Rejuvenated economy and domestic market
 Use of multiple currencies thus minimizing exchange risks
 Access to major regional markets; SADC/ COMESA

8. Investment Opportunities
• Main sectors of the economy available for
investment are:
 Mining
 Manufacturing
 Tourism
 Energy and Infrastructure Development
 Agro-industries
 Consumer facing industries
 Increasing investment in these sectors is critical for
achieving sustained economic growth and development
 Specific Opportunities in the various sectors are as
follows:

9. Manufacturing
 The Sector is currently operating at 40% of capacity and the
objective is to achieve at least 60% by year end.
 There is need to retool and rehabilitate plant and equipment
and to install new capacity.
 The sector involves production of industrial intermediate and
capital goods, consumer goods and value addition of primary
products.

10. Manufacturing
Major sub-sectors include:
 The key thrust is on value addition
 Textiles: Cotton ginning, spinning, weaving, finishing textiles
and knitting products
 Clothing & Footwear: Wearing apparels and footwear
 Chemicals: Fertilizers, insecticides, pests, paints, varnishes,
soaps, detergents, inks, glues, polishes, pharmaceuticals,
industrial chemicals, petroleum products, rubber and plastic
products
 Wood & Furniture: Saw milling, wooden products, furniture
and fixtures
 Metal & Metal products: Machinery and equipment, radio
and communication equipment
 Information Communication Technology: Information processing,
computer assembly, solar technology and consumer electronics

11. Tourism
Zimbabwe is a destination of
unrivalled tourism attractions.
Over 2 million people used to
visit the country annually.
 Zimbabwe is ranked second in
the SADC region in terms of
tourist arrivals.
The tourism sector used to
contribute 6% of GDP, 2.2% of
formal employment and 10% of
foreign exchange earnings.

12. Major Tourist Attractions
National Parks Victoria Falls
Victoria Falls
Great Zimbabwe
Mana Pools
Gonarezhou National
Park
Eastern Highlands
Matopos
Kariba Dam
Chinhoyi Caves
Hwange National Park
Kariba Dam Great Zimbabwe

13. Investment Opportunities in the
tourism sector
 Trans-frontier Conservation
Urban Areas (accommodation,
Areas/Parks (e.g. Great restaurants, transport and touring
Limpopo Trans-frontier Park) services and conference facilities)
Tourism Development Zones  Eco-tourism (conservation of
(areas with high tourism the environment, partnerships
potential where investors
with the local communities.)
enjoy various tax incentives)
Hunting safaris and tour
operations (a rich and varied
game species including the Big
Five )

14. Mining
 The sector requires US$6bn in  Zimbabwe has the second
next 5 years for capitalisation largest deposits of platinum in
The sector has immense the world.
opportunities for investment as Black granite, which is ranked
the country is endowed with a as the best dimension (building
vast range of mineral resources. stone) stone in the world.
Mineral resources include gold, Coal, Coal-bed Methane.
base metals (e.g. nickel, copper,  Diamonds.
zinc and lead) and industrial
minerals (limestone, phosphates,
clay, dolomites).

15. Mining Investment Opportunities
 Resuscitation of existing mines
Prospecting and establishing
new mines for various minerals
including gold, coal, diamond,
granite and platinum.
Quarrying and value addition
of dimension stones such as black
granite.
Beneficiation of minerals e.g.
cutting and polishing of
diamonds, jewellary
manufacturing and tile
manufacturing.

16. Indigenization and Empowerment
16
 The New indigenization and empowerment regulations have been
misunderstood or deliberately vulgarized in some circles
 Government’s position of the 51% local ownership is very clear.
 The law gives investors the initiative to develop compliance plans
 Government will not nationalize or expropriate private assets
 Essar deal provides good lessons on investing in frontier markets
 Government learned its lesson on the land reform process, and we are not
going to repeat the same
 The focus is on broad based empowerment, to ensure that the majority of
Zimbabweans are integrated into mainstream economy
 Investors have not fully explored other options such as community trusts,
corporate social responsibility, employee share ownership, management
stake and others

17. Agriculture
The Sector is the Backbone of the Zimbabwean economy with backward and
forward linkages with the major sectors of manufacturing, tourism, mining and
service sectors. Opportunities Include the following:
 Private equity in agricultural institutions, mechanization and farm technology
•Primary production of
Value addition in the agriculture sector,
for instance,
food and cash crops,
-meat processing,
horticulture, -fruit juice manufacturing,
livestock, -export of horticulture and floriculture,
-processing of cotton lint,
Poultry farming,
-sugar milling
fishing and fish farming -timber processing.
-game, wild life ranching,

18. Infrastructure and Energy
 After years of continuous economic decline there has been a
serious deterioration in the state of infrastructure in
Zimbabwe.
 Government recognizes the need for private sector
participation in financing and development of infrastructure.
 Government acknowledges the important role of the private
sector in financing infrastructure development.
 The private sector is therefore welcome to participate in the
development and provision of infrastructure on a public
private partnership (PPP) basis.

19. Major Infrastructure Sub-Sectors
 Energy (electricity, gas, bio fuels and renewable energy)
 Transport (roads, bridges, railways and airports)
 Communications
 Urban water and sewage reticulation
 Agriculture infrastructure including dams and irrigation
schemes.
 Industrial parks and factory shells.
 Housing and Office buildings
 Health Facilities
 Education Facilities
 Sporting Facilities

20. Infrastructure Investment
Opportunities
• Some of the urgent infrastructure projects that need
investment include the following:
• Transport:
 Zimbabwe is strategically located in the Southern African region to
act as a transport hub for both goods and passengers.
 Scope exists for private sector investors to participate in the
development of transport infrastructure such as development and
upgrading of roads, bridges, railways and airport facilities.
 Major projects include dualisation of the Beitbridge-Harare-Chirundu
and Beitbridge-Bulawayo-Victoria Falls Roads.
 Upgrading the national railway infrastructure and putting up a new
railway line between Harare and Chitungwiza.
 Upgrading of Kariba and Victoria Falls Airports
 Air Zimbabwe; strategic partner
 National Railways; rolling stock

21. Water
 There is scope to harness water for enhanced agricultural production, as
well as clean water for domestic use.
 This provides opportunities for the construction of dams and other water
bodies for irrigation. Kunzvi dam, a few km outside Harare is one
project where Government is seeking a partner to complete the dam
and also establish a horticultural park. It is hoped the dam will also
augment City of Harare’s water supply.
 Other water projects include Tokwe Mukorsi dam, Gwayi-Shangani
dams, Mtshabezi water pipeline, and Zambezi-Bulawayo water
pipeline
 Urban water and sewage reticulation in the major cities and towns need
to be upgraded, thus offering opportunities for partnering with the
relevant Local Authorities in the provision of these essential services.

22. Energy
 Electricity deficit in Southern Africa provides scope
for establishment of new hydro and thermal power
generating plants; transmission and distribution of
electricity.
 Energy development projects include thermal power
projects in Hwange and Gokwe North, Kariba hydro
extension.
 Availability of large deposits of coal-bed methane
gas in Lupane holds the promise of a cheap and
relatively clean source of power.
 There is also potential for developing bio-fuel
plants and to exploit solar energy.

23. Electricity Production
23
Power Capacity Available 2011 2012 2013 2014 2015
station Installed
Kariba 750 650 750 750 1000 1050 1050
Hwange 920 547 780 920 1200 1520 1520
Harare 100 - - 40 60 100 100
Bulawayo 90 - 40 60 80 90 90
Munyati 100 40 40 60 80 90 90
Total 1960 1237 1610 1830 2420 2860 2860

24. Communications
 Postal and telecommunication services are currently dominated
by the public sector.
 The only private participation is in the form of two private
cellular phone operators and some private couriers.
 Going forward the government has pronounced its intention to
open up space for more private sector participation in the
provision of communication services including ICTs.
 ICT Backborne; huge opportunities for investors

25. Construction & Real Estate
 Development of factory shells,
industrial and technology parks
 To assist in lessening the initial
capital cost outlay for the small
– medium scale industries.
 To provide industrialists with
readily available factory
accommodation so that they
can concentrate their effort on
securing plant and working
capital.
 Development of residential
housing schemes. The country
has housing backlogs in major
towns and cities.
 Construction of Office Blocks.

26. Social Services Infrastructure
 Health: - Establishment of private health facilities such as
hospitals, dental clinics and other specialist services.
 Education: - Establishment of private educational facilities such
as schools, colleges and universities.
 Sports: - Development of state of the art sporting facilities such
as golf courses and stadia, which also supports tourism.

27. Taxation in Zimbabwe
Corporate Tax Rate 30%
Aids Levy (on tax payable) 3%
Capital Gains Tax 20%
Shareholders’ Tax on Dividends
 Listed Shares 15%
 Unlisted Shares 20%

28. Investment 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%

29. Investment Incentives
Continued
 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%

30. Special Economic Zones
30
 To be reintroduced in the Amended Zimbabwe
Investment Authority Act and to include:
 0% income tax for first 5 years
 15% thereafter
 Exemption from capital gains tax
 Exemption from non resident taxes
 Duty free importations
 Sales tax on goods and services refundable

31. Guidelines for Investing in Zimbabwe
Immigration Requirements/Work Permits
 There are no minimum and maximum investment thresholds but
investors wishing to take up residence in Zimbabwe should invest
at least:
 US$300 000 for a sole venture.
 US100 000 for a joint venture with a local investor.
 Investors investing at least US$1 million qualify for automatic
permanent residence. All business activities undertaken by
foreign investors have to be approved by the Zimbabwe
Investment Authority as foreign investment.

32. Guidelines for Investing in Zimbabwe
Exchange Control Issues
In order to remove restrictions on business transactions,
government has deregulated restrictive exchange controls and
delegated export administration and payment authority to banks.
Individuals and companies are now free to pay for goods and
services offshore as well as service external debts without prior
approval of the Exchange Control Authorities.
Applications on income related transactions such as dividends,
profits and capital repatriation no longer require Exchange
Control approval as was the case before.
Consistent with the use of multiple currencies and the need
to enhance exports, corporates and individuals can now
operate Foreign Currency Accounts (FCAs) with indefinite
retention of FCA balances as opposed to the previous
situation where they faced a 21 day liquidation
requirement.

33. Reform Agenda
33
 One Stop Shop Investment Centre
 Launched 13/12/10
 Strategy where relevant government agencies and authorities responsible
for issuing licenses and permits to investors are brought together in a
coordinated and streamlined manner to provide prompt, efficient and
transparent services to investors.
 Should be viewed as part of the process of consolidating macroeconomic
recovery, which includes other measures being taken by Government to
improve the investment environment, eg BIPPAs.
 Physically under one roof at ZIA
 To deliver efficient service to investors within clearly stipulated time-frames
(5 day rule).

34. Objectives of One-Stop-Shop
34
 To simplify and shorten procedures and guidelines for issuance
of business approvals, permits and authorizations, thereby
removing bottlenecks faced by investors in establishing and
running businesses.
 To address administrative bottlenecks
 To reduce time and high cost of doing business
 To eliminate dealing with multiple agencies
 To eliminate use of discretion and lack of transparency in
granting approvals, licenses and permits.
 To improve on quality of service delivery
 5 working days

35. Features of OSS
35
 ZIA coordinates and provides frontline services under the OSS Centre.
 The OSS covers investments into all sectors of the economy
 Mandatory registration for all foreign investors to facilitate investor/FDI
tracking and after-care
 The selected agencies for the OSS physicaly present at ZIA
 A client charter to set standards and service targets including approval
time-frames.
 All guidelines and procedures simplified and will be put on the ZIA website
 All participating agencies to review, re-engineer and streamline their
procedures
 All Agencies to work towards establishing an on-line approval system which
is interconnected.
 Establishment of Investor Tracking System (ITS)

36. Investment Process Under OSS
36
New investor
ZIA Investor Facilitation Unit
ZIA Investor
Registration
Certificate (IRC)
Company Registrar
(Certificate Others
of Incorporation) EMA, Mining,
Immigration ZIMRA Local Authority
Department (register for Utilities, Indig
(Residence VAT, PAYE, And Empowerment
and income tax),
Work Permits) Customs Clearance .

37. Way Forward
37
 Crafting of supportive legal framework through amendment of
ZIA Act and other legislation is under way.
 Investor Tracking System being put in place to enable efficient
and effective follow-up and after-care of licensed investments.
 Government working on a number of reforms to ensure that
there is rule of law and respect of property rights in the country
 SADC roadmap designed to ensure free and fair elections
 Election date to depend on completion of constitution making
process