Promoting accountable investments in Zimbabwe

By The Standard | Sep. 25, 2022

SUSTAINABLE DEVELOPMENT

On September 23, 2022, the Information for Development Trust (IDT) in conjunction with Sapes Trust held a policy dialogue titled: Promoting accountable and sustainable investments in Zimbabwe’s natural resources sector

IDT implemented a 12-month investigative journalism project with assistance from the US Public Diplomacy Section.

The main objective of the project was to investigate foreign investments in Zimbabwe, so as to enhance transparency and accountability.

Local and southern African media houses and journalists were involved in the production of 16 investigative stories. The Standard was also part of the project through IDT.

Some of these stories were brought together in a compendium that was launched at the Thursday event.

Aja Stefanon, the deputy economic chief at US embassy in Harare was the guest of honour and below are her remarks in full.

I want to thank Tawanda Majoni of the Information for Development Trust (IDT) for his introduction and for organising today’s book launch event.

We have enjoyed this continuing partnership with the IDT.

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In it, we have seen the power of investigative journalism in influencing positive outcomes for both communities and investors.

It is in this context that I also want to acknowledge the contributions of our discussants today.

Both Dr Farai Maguwu of the Centre for Natural Resources and Governance; and Dr Solomon Mungure, a natural resources governance expert, graciously provided training for journalists to inform their work in this complex sector.

Working with mentors like Kholwani Nyathi, editor of The Standard newspaper, they have ensured that journalists have the resources and knowledge to provide complete and truthful information about developments in sectors that were previously seen as opaque and untouchable.

I’ve been in Zimbabwe for a little over a year now, and I am struck daily by all the potential investment opportunities across sectors.

One embassy priority is to improve engagement between the US private sector and Zimbabwean entrepreneurs to encourage more trade and investment between our countries.

The US government recognises the important role responsible foreign direct investment or FDI, can play in a country’s sustainable development plans.

FDI brings significant benefits by creating high-quality jobs and introducing modern production and management practices.

We welcome the government of Zimbabwe’s positive steps to encourage foreign investment, like the formation of the Zimbabwe Investment Development Agency to improve the ease of doing business and promote domestic and foreign investment and the removal of indigenisation requirements.

So, that begs the question: why isn’t there more investment?

Governments seeking domestic and foreign investment — including from US companies — can increase the attractiveness of their investment climate by pursuing policies characterised by fair, transparent, and predictable conditions for investment.

There are several elements that create an enabling environment for foreign direct investment like respect for rule of law and private property rights, effective measures to combat corruption and to ensure government action is guided by rule of law, and the free transfer of funds into and out of the country and exchange of currency, at a market rate of exchange, without delay.

Many of the elements that create an attractive investment climate for companies — US companies specifically — remain a challenge for the Zimbabwean government to put in place or enforce.

For example, endemic corruption presents a serious challenge to businesses operating in Zimbabwe.

Zimbabwe’s scores on governance, transparency, and corruption perception indices are well below the regional average. US firms have identified corruption as an obstacle to FDI, with many corruption allegations stemming from opaque procurement processes.

Nevertheless, Zimbabwe continues to receive FDI although the amount has dropped significantly since 2014.

We must acknowledge foreign investment does not always bring benefits to the community.

Foreign companies have been accused of taking advantage of low wages and violating human rights and labour rights in countries where governments fail to enforce rights effectively.

We note the specific concerns communities in Zimbabwe have regarding foreign investments in the extractive sector.

Zimbabwe’s mining sector currently lacks safeguards that would ensure benefits for the local community and contribute to the country’s sustainable development.

This is why we value our partnerships with Zimbabweans; and supporting the work that IDT does.

This work has ensured that media plays its watchdog role in safeguarding shared goals in labour, human rights, and natural resources governance.

Let me emphasise, our training programmes for journalists aim to strengthen independent media in Zimbabwe.

It fosters investigative journalism to inform citizens and promote public debate.

We do not use the media to target or assist any particular political group.

We provide trainings and US exchange opportunities to journalists in Zimbabwe and around the world to build expertise.

An impartial, professional, and free press is key to all democracies.

Our training and exchange opportunities are transparent and have no strings attached.

And we encourage all Zimbabweans to take advantage of the US sponsored opportunities we share on our social media platforms.

Promoting a strong and free media is a critical component of US government assistance, as it contributes to a transparent governance environment and healthy democracies globally.

US foreign direct investment offers an alternative model and diversifies the types of companies competing in these sectors.

Many US companies practice responsible business conduct both at home and abroad. What does that mean?

It means US companies invest in responsible quality projects that consider impacts to the environment (ecosystems, biodiversity, climate, weather, resource use), society (non-discriminatory access, human rights, marginalised groups, labour rights), and governance (cost-effectiveness, accountability, transparency, and integrity).

Do all US companies conduct business abroad as responsibly as they should, or could?

No, but US companies acknowledge these best practices and local communities have a place to start a conversation to demand better.

I want to take a moment here to mention sanctions because the Government of Zimbabwe blames sanctions for all the country’s economic woes.

Let me be clear on this point: the US targeted financial sanctions program is not a trade embargo and does not impede investment in Zimbabwe.

The US sanctions program targets 73 individuals and 37 entities.

In other words, we have sanctions on 73 people out of a population of almost 16 million and 37 entities (business, farms, corporations) out of a plethora of institutions.

It’s not sanctions that have depressed Zimbabwe’s economy and it’s not sanctions that led to a downward trend in FDI.

As part of an on going review of the sanctions programme to ensure it remains focused and relevant, the United States recently delisted 11 individuals from the sanctions list and designated one individual for his role in undermining democracy.

The 11 delisted individuals were either deceased or have been deemed to no longer undermine Zimbabwe’s democratic processes and institutions.

We’re committed to maintaining a dynamic programme that targets those most at fault for undermining democracy, violating human rights, and facilitating corruption.

The United States is eager to partner with the Zimbabwean people to help create an environment conducive to responsible investments that support the country’s sustainable development.

There are currently 13 US companies based in Zimbabwe and another 20 companies have a US affiliation or relationship.

We need more US investment in Zimbabwe, and luckily, I am not the only person who thinks this way.

There is currently an effort underway to launch an American Chamber of Commerce in Zimbabwe which aims to grow and further solidify linkages between the US private sector and Zimbabwe.

As Secretary Antony J Blinken recently in Nigeria stated: “the United States wants to strengthen our partnerships across Africa in ways that serve your interests, our interests, and the interests of people worldwide whose lives and futures depend in part on what we can achieve together.”

Once again, congratulations to IDT on the book launch. I look forward to hearing the comments from the panel and the resulting discussion.