Reserve Bank of Zimbabwe (RBZ) governor John Mangudya says production-based incentives will lure investments and drive economic growth.
BY BUSINESS REPORTER
Zimbabwe has been lagging behind regional neighbours in attracting foreign direct investment (FDI) due to unfavourable policies. FDI into Zimbabwe last year dropped 23% to $421 million from $545 million in 2014.
In an interview with NewsDay last week, Mangudya said the incentives would change the theme to production from consumption.
“Production requires a conducive investment climate. If you charge 1,2% on EMA [Environment Management Act] with a cap of $2 million who will invest? We need ease of doing business to ensure that incentives are given to investment,” Mangudya said.
He said the incentives would spur more exports, generate employment and give Treasury more fiscal space.
Mangudya said Zimbabwe has to give national project status to investments. Last week, government announced it would forgo duty fees and other taxes after giving TradeKing’s $50 million project national project status.
He said the 5% export incentive scheme would change the narrative to production. The incentive is coming under the $200 million facility guaranteed by the African Export-Import Bank. Qualifying exporters will be paid an additional 5%, but in bond notes. This has raised fears that government wants to revive the Zimbabwean dollar, decommissioned last year which would trigger inflation.
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Mangudya said the bond notes would be released in drips and act as a cushion to exporters against falling prices on the international market.
