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Gono decries slow implementation of SEZs

By Mugove Tafirenyika

Former Reserve Bank of Zimbabwe (RBZ) governor Gideon Gono left parliamentarians eating out of the palm of his hand yesterday, when he narrated how Special Economic Zones (SEZs) will augment efforts aimed at reviving the country’s economy.

Former Reserve Bank Governor Dr Gideon Gono
Former Reserve Bank Governor Dr Gideon Gono

Appointed SEZ chairperson in June last year, Gono, however, decried the yawning disconnect between President Emmerson Mnangagwa’s vision to turn around the country’s economic fortunes and the lethargy on the part of those who are supposed to make it happen.

This came out in the National Assembly yesterday when the SEZ board chairperson appeared before the Foreign Affairs, Industry and Commerce parliamentary portfolio committee.

Government enacted the Special Economic Zones Act (Chapter 14:34) aimed at drumming up foreign direct investment (FDI) last year.

FDI is critical in stimulating value-added exports, creating employment and boosting economic growth.

The enactment of the SEZ Act was followed by the identification of three SEZs, including Sunway City, Bulawayo and Victoria Falls.

But due to lack of funding, the absence of a chief executive officer (CEO) and secretariat, Gono revealed yesterday that the three SEZs pilot projects were not yet operational.

“It would appear there was an oversight regarding availing resources to the board as we have found ourselves driving a car on an empty fuel tank so to speak after we were given a tenth of what we had requested,” said Gono, who was flanked by some of his board members namely Ozias Hove (a senior principal director in the office of the President and Cabinet — OPC), Constance Zhanje (from the ministry of Industry and Commerce, Christopher Dube (town clerk for Bulawayo) and a Mr Gapara from the ministry of Labour and Social Welfare.

“We also do not have a CEO and a secretariat; so without all these there is very little we can do,” he added.

Nonetheless, the SEZ board has since conducted interviews for the CEO and is now awaiting approval of the CEO from three candidates the board recommended to government at the beginning of October 2017.

While SEZ used to fall under the ministry of Economic Planning, the dawn of a new era appears to have caught government bureaucrats napping.

Gono told parliamentarians that the new reporting line was yet to be clarified.

“These are the necessary pains of a transition and we hope that soon all will be clear and we get advice on where we belong. We have written to all we think are responsible for us to have them confirm whether we are their child or not because the Act simply says we belong to a ministry without stating which one exactly,” Gono said.

The former RBZ governor hailed Mnangagwa’s thrust in drumming up FDI and his clarion call at Davos in Switzerland that Zimbabwe was open for business.

Regarding issues bogging down the SEZ board, he felt there was lethargy somewhere along the line, especially on the part of those who are supposed to implement the president’s vision.

A SEZ board member and principal director in the OPC, Hove, told the committee that Mnangagwa was fully briefed on the issues affecting SEZs saying;“The president is fully briefed about the situation on the ground, he is up to date about the challenges …”.

But Gono interjected, saying the president he knows was an action man and should have dealt with the issues holding back SEZ if they were brought to his attention.

“No, I want to contradict my colleague here and state that the president is not aware of this. If he were aware, I am sure he would have moved in to address that because he is so particular about this if you recall his inauguration speech,” said Gono, an astute banker.

The committee also heard that the SEZ board is operating using its own resources as well as the chairperson’s offices.

While parliamentarians appreciated Gono’s improvisation, they said such a situation was not healthy for the country as “we will never be able to win the SEZs because they are a personal project under the circumstances“.

Asked to explain allegations of conflict of interests in which Gono’s projects are also being considered for the SEZ licence, Gono said he had declared his interests long before his appointment.

Gono said he had approach the OPC “seeking support for the establishment of an agro-hub at my farm and an industrial park and they liked the idea. On the first day of my appointment, I declared my interest”.

“You may also know that I have been in business for 35 years of my 42 working years. Conflict of interests issues are provided for in the Act in terms of how to deal with it,” he explained.

Gono also explained in great detail what is involved when an area is declared a SEZ, including issues of fencing off the area in order to demarcate the zone from a customs area.

To this end, Gono explained that it was not possible to fence off the whole of Bulawayo or Victoria Falls but part of them.

“We then had to start anew to identify areas and we are even saying if in your respective constituencies, there are areas we can make SEZs then so be it because making Bulawayo one for example, it means we were going to insulate it and say you are no longer able to enter the city as and when you want because of the status which now makes it an offshore market”.

He said the board is now considering over 60 applications for licences to become SEZs while awaiting the provision of funds from Treasury.

Market experts said over the years, the country has been receiving low levels of FDI inflows averaging less than $400 million annually, against regional average levels of around $1,2 billion.

In Bulawayo, the target was to create an industrial economic zone covering the beef and leather industry, cotton and textile, steel and foundry as well as the rehabilitation of the National Railways of Zimbabwe.

In addition, a tourism hub was targeted for the corridor stretching from Victoria Falls-Gwayi–Binga–Kariba, while Victoria Falls is targeted as a financial hub and Sunway City as a technology hub.

Under the SEZs, foreign investors will be exempted for the first five years of operation and a corporate tax rate of 15 percent will be applicable thereafter.

Other incentives offered by the government under the SEZ Act, include a flat rate of 15 percent tax on specialised expatriate staff and duty-free imports for capital equipment to be used in the designated areas.

In addition, inputs which include raw materials and intermediate products imported for use by companies set up in the SEZs will be imported duty-free.

However, exemption will not apply where such raw materials are produced locally.

Crucially, the SEZ Act proposes to exempt businesses from strict labour laws and indigenisation regulations in order to court potential investors.

Don’t miss tomorrow’s edition for extracts of the parliamentary proceedings. DailyNews