The government is considering turning the town of Victoria Falls into a special economic zone or tax haven. But unlike many other off-shore tax havens, Zimbabwe lacks political and economic stability.
The Maldives, Mauritius and the Seychelles comprise Africa’s traditional tax havens. It is estimated that between US$21 and $32-trillion is sheltered on islands like these. But African havens are a liability for the continent. They promote capital flight.
Conservative estimates suggest that in Africa, an estimated US$1.26 -1.44-trillion disappears daily. South Africa’s economy was worth an estimated US$390-billion in 2012. What is lost daily in Africa is the equivalent of losing Africa’s largest economy three times over.
Offshore banking in the island nations is highly attractive. It allows individuals and companies to bank money discretely, protecting large undisclosed sums of money from heavy taxes on land.
The money earns interest in an environment where there is little financial, legal or political oversight. Now Zimbabwe wants to emulate those states. It plans to offer discrete banking services and high returns. But it lacks one thing – political and economic stability.
Equally off-putting is its controversial indigenisation laws that force foreigners to cede 51% of their assets to locals. But Zimbabwean officials say domestic banking laws will not apply to the tax haven.
It remains to be seen whether banks operating there will escape indigenisation. There is no word yet as to when Victoria Falls will be given the go-ahead for banking to commence. –eNCA