Public Policy Making in Zimbabwe

For the de let oned ten years, Zimbabwe has been riddled with economic stagnation as well as being the subject of political instability, thus that been the reasonwhy some(prenominal) companies and countries have turned a blind eye as concerns investing. Once known as the bread basket of Africa, Zimbabwe has the ability to phaseulate up again especially with the globally accepted new authorities of Unity were the two major(ip) political fractureies, ZANU PF and MDC have come together to work as one for the betterment of the ground and to process the needs of the people. at that place has been little to no investment in Zimbabwe as many pulled out during the past decade. Foreign investment is when a company invests financially in a solid ground abroad, whether in the form of portfolio investments which include sh atomic number 18s, stock and bonds, or in the form of direct investment where local anestheticly based operations ar owned and controlled by the hostile investing corporation. Such investments are controlled by laws known as International trade laws. International Trade law includes the appropriate rules and customs for handling trade betwixt countries or between private companies across country borders.Most countries are part of a dead body that has made an agreement for trading internationally. Zimbabwe is part of several including UNICTRAL (United Nations Commission on International Trade Law), BIPPA (the isobilateral enthronization Promotion and Protection Agreement) and COMESA (the common Market for Eastern and Southern Africa). Zimbabwes local body, governance foreign investment is the Zimbabwe Investment Authority with approval necessary from the Reserve Bank of Zimbabwe and Registrar of companies.The take away below shows the depths to which the Zimbabwean economy had fallen. Foreign Direct Investment Statistics 52. Zimbabwe Net Investment Flows 1998-2007 (US$ million) 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Direct Inv estment 436 50 16 0 23 4 9 103 40 69 Portfolio Investment 11 21 -1 -68 -2 4 2 Source IMF, UNCTAD, Ministry of Finance However, what is common is that Africa is the one continent that most world-wide capitalist powers compete for due to its vast resources and wealth, examples eing of Nigeria and its oil, The Congo, Zimbabwe, South Africa and Botswana for their diamonds and precious stones as well as many other aspects such as Tourism. Zimbabwe to one of the Wonders of the world, and some people resembling investing in tourism, further over the past decade they decided non to. Countries would have loved to do that for reasons such as the 2010 world cup but in as much as opportunities arise, if a country is not politically and economically constant, it becomes almost obfillet of solete to even the most interested investors.Zimbabwe economic situation was is dismal, having the largest peacetime chuck out in GDP ever recorded (http//www. state. gov/e/eeb/rls/othr/ics/2009/1171 67. hypertext markup language) at roughly 50%. The Economist Intelligence Unit (in the USA) estimates that 12. 8% of the GDP dropped in just one year- 2008. The inflation rate is the highest in the world, officially estimated at closely 231 million percent in July last year. Unofficially however, inflation rates of the Zimbabwean dollar are said to be hundreds of billions if not quadrillions and this is save the tip of the ice berg. The reasons why foreigners had pulled out were because of the instability that was brought rough afterward the vote down return programme political instability divisions between the two parties and how that affected the country Economic sanctions these can cripple a whole economy and country the breakdown of the stock swap the non transparency of the companies and their involvement with organization high taxes unprofitable economic environment inflation that started in the thousands and end in the millions the laws and regulations govern ing foreign investment limited protection for foreign investors in some cases corruptnessThe biggest problem the country was facing is that the rule of law no longer exists in the country. Instead, numerous governance policies were ill formed and passed. Some that totally nullifies the power of law and order and in some cases, kind rights. Currency exchange is a crucial part of foreign trade, the governments Conversion and remove Policies were uncertain and changed unexpectedly several times. This has put a constraint on business planning and operations and most companies would much rather not risk make great losses because of a abrupt adverse change in policies.The government of Zimbabwe had been known to disregard any judgments passed against them by international arbitrators, making the country a place full of law slightness, dangerous and too risky to invest in. For example in 2005 a group of Dutch farmers whose farms were seized chthonic the land reform program took th eir case to the International meat for Settlement of Investment Disputes (ICSID), demanding that the Zimbabwean government honour the BIPPA between the Netherlands and Zimbabwe. Although the government acknowledged that the farmers had been deprived of their land without wearment of compensation they disputed the US$30million claim by the farmers. A decision is yet to be reached. A policy amendment Constitutional Amendment 17, enacted in 2005, removed the right of landowners whose land had been acquired by the government to contest the acquisition in court. To increase foreign investment the governments priority should be to secure the rule of law and order.Restore the peoples faith in the power and fairness of the judicial administrations and government of Zimbabwe. They can do this by honouring their agreements with other countries and renouncing past policies that contradict initial agreements. It would be messy but the country itself is already in a bad state. Righting the wrongs is in that respectfore being an important part of reviving the nations economy. Nepotism, favouritism, victimization, and discrimination would have to be seen as no longer brisk in the country to make investors feel once again confident and safe investing Zimbabwe. tally to the best available surveys only 7% 700 000 people of the nations population is employed in the formal sector, otherwise at that place is 80% unemployment in the formal sector. Most qualified workers have fled the country in bet of greener pastures. The government rightly expects foreign investors to maximize use of local managerial and technical personnel. But in my sound judgment it is the governments responsibility to ensure that such personnel are available.Their policy making should indeed first focus on educating and catering for its people so they are available and up to international standard when foreigners come to invest and need workers. The government should make policies that direct a lo t much funding into the Educational sector of the country which was once very well respected and recognised. Those way investors would regain more ready, capable and qualified locals to employ. The government should im farm the health sector by injecting funds to pay doctors and nurses well.Qualified health workers flee Zimbabwe as soon as they get the chance in search of better, more consistent work environments. With well paid doctors and health personnel the country could avoid crises like the cholera outbreak in 2008 and ensure a safe physical environment. In all this however, Zimbabwes government has made efforts to improve foreign investment. They have created foreign trade zones and processing ports. Benefits include 5 year tax holiday, duty free importation of raw materials and capital equipment for use in the EPZ.There is a requirement to export 80% of turnout in these zones however so this makes the offer less attractive to foreign investors. The government should con sider reducing the stipulation in order to attract more investors. After the formation of the Government of National Unity, there was increased support from the international world on how to come up with a sound political framework and policy formulation that could encourage foreign investors, and true to form, the two parties have been trying to work with each other so as to do so.South Africa and Botswana, although closer to home than the usual British and American investors, have already started investing in the archeological site and farming sectors, with notable billionaires such as Patrice Motsepe of South Africa playing a crucial part in the field. The goals business sector itself is pushing for 1. Transparency in business and transactions 2. Sustainable taxes for investors 3. regulatory laws that also work favourably for foreigners 4.Strict function and control of the 49% foreign ownership and 51% Zimbabwean ownership where even those that are foreigners and own 49% are e ntrusted to make Zimbabwean colleagues, their managers and CEOs for the sole issue of trust among many things. Such partnerships are being encouraged. The stock market for one is dressing on track, especially with the use of the US dollar and South African rand which is making the market stable and opening up the incentive of investing as there is no longer inflation after the current none use of the Zimbabwean dollar.For the remember while, it is not being used although it has not been eradicated as it will be top in use once the environment is permitting. The policies government makes should firstly, show that the country is serious about attracting foreign investment at the moment, it looks like South Africa, Egypt, Ghana and Nigeria are the only serious ones. Countries like Botswana, Uganda and Kenya are countries that are coming up and under observation in the mean time.Secondly the policies should market Zimbabwe as aggressively as other regions of the world because as of now there is need for a supportive business framework such as transportation and communications infrastructures, expert or trainable human resources, and equitable trade and employment practices. Thirdly they should be aimed at demonstrating to investors the opportunity represent of not investing in Zimbabwe. Previously the government has certain policies in place, formed and implemented under a dictator regime In 2008 the government introduced an Indigenization Act that mandates, over time, 51 percent autochthonous ownership of businesses.The government reserves several sectors for local investors. Under current laws, foreign investors wishing to go in in these sectors may only do so by entering into joint venture arrangements with local partners. The foreign investors are allowed to own 35 percent of the operation. The following industries face these restrictions Agriculture/Forestry Primary production of food and cash crops , Primary horticulture , Game, wildlife ranching a nd livestock, Forestry , Fishing and fish farming, Poultry farming , Grain move , Sugar refining. Transportation Road haulage, Passenger bus, taxis and car hire services of any kind, Tourist Transportation, sound off operations. Retail/wholesale trade including distribution, Barber shops, hairdressing and beauty salons, Commercial photography, Employment agencies, Estate agencies, valet services, Manufacturing, marketing and distribution of armaments, Water provision for domestic and industrial purposes, Bakery and confectionary, Tobacco packaging and pass judgment post auction, Cigarette manufacturing. Source (www. nationsenclclopedia. om/economies/africa/zimbabwe/foreign-investment). . The government needs to recognise that this may not be tolerable enough incentive for investors. They should therefore revaluate and review their policies in some areas to encourage foreigners to invest. The percentages given to foreigners may prove unprofitable to a large conglomerate looking to run a company based in Zimbabwe. They would rather invest in a place where returns can be maximized, and the government should therefore allow foreigners a larger percentage of the business. he Government of National Unity has taken this into consideration and exposed its door to all country stakeholders in 2009 to be part of the new policy making process, this include miners, lawyers, pastors, NGOs and many other diverse groups. This reflected the positive determination of Zimbabweans and the government to get back on reinvest itself bigger and better. Our president was quoted at a mining conference to attract foreign investors who are sceptical about Zimbabwes respect for property rights following the disruptions on commercial farms and a raft of moot indigenisation laws Because it is capital intensive, the mining sector requires regional and international partners who can bring in the necessary capital, mining technology and management expertise to complement local resource s, Mr Mugabe told about 200 foreign investors. On its part, the government is committed to ensuring that the policy environment is stable, predictable and sufficiently attractive to guarantee investors good returns on their investment. Investors and locals kindred look forward to the growth our economy will experience because of the new policies being put in place and the effort of our Government of National Unity is making to involve all stakeholders and uphold those laws. References ? http//allafrica. com/stories/200909180530. html ? http//www. allbusiness. com/trade-development/trade-development- ? NationsEncyclopedia. com ? www. zimtrade. co. zw ? www. zia. co. zw ? http//www. state. gov/e/eeb/rls/othr/ics/2009/117167 ? www. hg. org/trade. html ? en. wikipedia. org/wiki/United_Nations_Commision_on_International_Trade_Law