FurtherAfrica met with Lloyd Manokore, Managing Partner at Manokore Attorneys – a member of DLA Piper Africa, in Harare to talk about the latest developments driving the attention of international investors to Zimbabwe.
Fabio Scala: Dear Lloyd, great to see you again. Thank you for taking the time to talk to FurtherAfrica today.
Mr. Lloyd Manokore: Thank you for the opportunity Fabio. I’m honoured and excited to share some perspectives on the opportunity to invest in Zimbabwe.
Fabio Scala: Although you know of my positive views for the Zimbabwean economy, the latest “not-so-positive” developments have raised a number of short term questions. Before we can talk about a mid to long term Zimbabwe, could you give me your view on current events?
Mr. Lloyd Manokore: Of course. Notwithstanding the ongoing elections and any contestations that are arising, it is important to note that Zimbabwe is in transition and the whole country is determined to pursue a different path to the current one and to try and change its fortunes. Investment decisions will have to be made based on empirical data and must track a defined and well informed timeline.
It is common cause that investment is a process as opposed to being determined by one isolated event, no matter the immediate impact of the event. It is therefore, critical to keep a focus on one’s intended objectives, in spite of the short-term prevailing political climate.. Zimbabwe continues to have the hallmarks of a structured economy and broadly operates along those lines.”
Fabio Scala: Great to hear that and I couldn’t agree with you more. Since the change in government a few months ago, Zimbabwe has been experiencing much needed attention from international investors with the promises of fresh capital to come in the near future. What would you say were the immediate effects to the economy?
Mr. Lloyd Manokore: Firstly, the events have brought about a change in the government’s narrative and messaging regarding the necessity to re-engage the international community and to court much needed foreign direct investment into the country. The incumbent President has been on record as stating that Zimbabwe is ‘’open for business.’’ That has then been buttressed and underpinned by some legislative reforms, aimed at removing impediments to doing business in Zimbabwe. Key amongst them, the significant amendments to the Indigenisation Act which opened up all sectors of the economy (with the exception of the diamond and platinum sectors). In addition, the country is also giving renewed impetus to its Ease of Doing Business Reforms. Whether all these interventions will yield actual measurable improvements to the economy, this can only be assessed in due time, but we remain optimistic.
Fabio Scala: Despite all the positive reactions to the “new” Zimbabwe and its “Open for Business” campaign, many critics are sceptical about the new government speech versus the actual changes in legislation. Could you tell us the changes you’ve seen so far and what you anticipate as upcoming legislation impacting FDI?
Mr. Lloyd Manokore: I have already mentioned the Ease of Doing Business Reforms. The objectives of the reforms are directed towards improving the business operating environment in order to promote foreign and local investment. This process entails amendments to significant pieces of legislation that are aimed at removing bureaucracy and to also facilitate investment.
As an anecdote, we are M&A lawyers and we would not be able to share these perspectives if there weren’t any transactions happening!
In addition to the amendments to the Indigenisation Act, other anticipated and notable changes in the pipeline include:
- Gazetting of the Special Economic Zones regulations which will set out the operationalisation of SEZ’s in Zimbabwe.
- Enacting of the Movable Property Security Interest Bill – this will make provision for movable property to be used as security and creation of a Collateral Registry to enable registration of security interests. Once enacted, it would allow for a greater scope for lenders’ activities.
- Updating of the Companies Act and the Insolvency Act.
- Passing of the Judicial Laws Ease of Settling Commercial Disputes Bill which aims to increase the financial jurisdiction of the small claims court as well as to establish a Commercial Court. The creation of this court is aimed at reducing the time frames in resolution of commercial disputes.
Fabio Scala: I’m sure you’re getting this question a lot, but could you explain to us the current state of foreign capital inflows and expatriation? Where is it at and where do you see it going?
Mr. Lloyd Manokore: Our experience is that the flow of investment capital into the country is directly linked to the perception of sovereign risk and/ or the specific sector or asset class risk. We essentially have a broad spectrum of these investment inflows. We have the risk averse investors who are taking a cautious approach and are ‘drip feeding’ their commitments on an ‘’as and when needed’’ basis. Then you have those who are already significantly committed and locked in already and are expanding their capital or debt inflows. Lastly, we have another source of inflows aimed at big ticket projects in the Public Private Partnerships space, particularly in infrastructure. These come with either syndication or DFI de-risk support. All the above are being consummated on the back of appropriate security and repatriation guarantees. The attendant features of such instruments are typically tailor made to the transaction.
Fabio Scala: My impression is that Zimbabwe seems to have opportunities in every sector I look. What are the sectors that you would highlight as having the better opportunities and why?
Mr. Lloyd Manokore: The key sectors would be Energy, Infrastructure, Mining, Agriculture, Tourism, and Private Equity. Power is critical to the operation of our economy and our industry, and the national utility company is unable to meet the current power demand. Accordingly, we’ve seen a lot of investment interest in independent power projects. In addition, a lot of our country’s infrastructure needs rehabilitation, particularly road, rail and our trade ports. Government is keen to embark on such infrastructure projects and a significant opportunity presents itself here, particularly with the PPP model in collaboration with Government. Successful implementation of these projects will once again re-position Zimbabwe’s strategic placement as a regional focal point for the Southern African region. It will also provide other opportunities for those in the logistics and trade sectors for instance and other downstream activities. Further, the idea of privatisation of many government parastatals is also under consideration. These include, various telecomm firms, aviation, power, rail and financial institutions. Lastly, mining has always been a key economic contributor, and several large- scale projects have already been initiated, especially in the chrome, gold, platinum, lithium and coal sectors. Whilst this requires large capital investments, Zimbabwe has a large proven resource, and this understandably retains investor interest.
Fabio Scala: Finally, if you have to give a foreign investor your pitch about coming to Zimbabwe, what would it be?
Mr. Lloyd Manokore: It is a country that has endured a ‘deferred promise’ of returns. We are acutely aware as transaction advisors and lawyers that the underpinning factor of any investment is risk mitigation and risk allocation. It is our growing view that investing in Zimbabwe is a phased process with a tremendous domestic and regional upside. Obviously, the underlying policy framework and even more importantly, the delivery of catalytic infrastructure is a priority. So, some of our clients are taking the composite approach and not just waiting for the Government to deliver infrastructure or other utility services, but have imbedded aspects of this into their projects. We are a frontier market. We are in transition, but we are also a part of Africa, fundamentally growing upwards in terms of demographics and pan African market access. Lastly, our well documented skilled human resource and human capital presents a well primed platform for rapid roll out of projects once financial commitments have been made.
We remain hopeful that Zimbabwe will stubbornly remain on the path towards global investment inclusion in due time.
Fabio Scala: Thank you for time, I am confident about Zimbabwe and hopefully we’ll be talking a lot more in the near future.
Mr. Lloyd Manokore: Thank you Fabio, and FurtherAfrica, for the platform.