THE Zimbabwe Investment and Development Agency (Zida) warns that US$43,12 million in foreign investments in the haulage and logistics industry are at risk due to Finance Act No 2 of 2024, reserving the sector and limiting foreign participation.
Following wide-ranging consultations between industry stakeholders and relevant government ministries and agencies, Treasury enacted Finance Act No. 2 of 2024.
This amended the Indigenisation and Economic Empowerment Act to add new reserved sectors — namely borehole drilling, haulage and logistics, shipping and forwarding, clearing and customs, and pharmaceutical retailing.
Under haulage and logistics, the reserved designation covers all activities involving the movement of goods, fuel, mineral ores, and other cargo within Zimbabwe’s borders.
It includes the use of rigid trucks (up to 15 tonnes), tipper trucks, dump trucks, fuel tankers and other road transport vehicles.
Consequently, foreign investors already operating in the sector were caught off guard, as the law did not distinguish between new entrants and existing foreign players at the time of enactment.
Zida approached the Parliamentary Portfolio Committee on Transport and Infrastructural Development seeking a redress on the matter for existing foreign investors in the haulage and related business industry.
“Zida notes with concern on the removal of foreign nationals. However, there is need for a balanced approach on how government treats foreign investors that were licenced to operate prior to the promulgation of Finance Act 2 of 2024,” Zida said in its report presented to the committee by the agency’s chief executive officer, Tafadzwa Chinamo.
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“In assessing the implementation of the proposal from the Transport Association of Zimbabwe, Zida considered the impact of the amendment on the 138 foreign investors distributed across these newly reserved sectors licensed from 2020 to 2024.
“More specific to haulage and related businesses, the agency licensed 34 companies since 2020 with a projected investment value of US$43,12 million, employing a total of 3 287 people.”
He continued: “Our position is thus premised on ensuring that companies already in the reserved sector be allowed to continue to operate subject to a waiver from the Minister of Industry and Commerce as envisioned by the draft regulations that the ministry is working on.”
He said by so doing the country would uphold its mandate to ensure Zimbabwe remains a good investment destination.
“Section 16(2)(B) of the Zida Act [Chapter 14:38] provides that every investor shall be entitled to the protection of their investment, and Section 17 guarantees against expropriation. A sudden change in law could be seen as indirect expropriation according to international investment law,” Zida said.
“This would likely result in potential arbitration claims against the government for failure to honour obligations towards investors. Furthermore, the Ministry of Transport and Infrastructural Development indicated that they offer three-year licenses to haulage and logistics transporters.”
Zida explained that the majority of the foreign transporters had already been issued licences prior to the amendments of the Indigenisation and Economic Empowerment Act.
“Consequently, according to the law, these licenses cannot be revoked unless there are road traffic violations,” Zida said.
“In this regard, the ministry recommended the lapsing of current valid three-year licence. Renewals will only be done for those that have reserved sector compliance certificates.”
Zida said policy consistency was key to attracting and retaining investment.
“Cancelling the licences of foreign investors currently operating in the reserved sector would be deemed as an irrational change in policy that prejudices foreign investors,” Zida said.
“It is, therefore, imperative to allow investors already operating in the country in the affected sectors to continue operating provided they seek a waiver as provided for by the law.”
