Special Economic Zones and their benefits to the Zimbabwe industry

 



By Tanatsiwa Dambuza

Special Economic Zones are geographical regions with economic laws that are more free-market-oriented than a country's typical national law. Special Economic Zones (SEZ) are still in their nascent embryotic stage yet progressively developing in Zimbabwe. The Special Economic Zones Act [Chapters 14-34], which came into force in November 2016 and was repealed by the ZIDA ACT, provided for the establishment of the Zimbabwe Special Economic Zones Authority, which according to section 20, has the power or authority to declare any area or premises to be a special economic zone and to amend, add to or abolish any special economic. The core functions of the Authority included administering and controlling SEZs, granting investment licences, and monitoring activities of approved investments. 

Zimbabwe's main objective under Zimbabwe Open for Business Mantra is to attract foreign direct investment (FDI), boost exports, link to global value chains and structural transformation the economy. In trying to promote the development of SEZ as a tool for the realization of the mantra, Zimbabwe has established Zimbabwe Investment and Development Agency (ZIDA), which handles bureaucracy challenges and investment approval processes, legal instruments, as well as fees for permits and licenses. According to ZIDA Act, it aims to provide for the promotion, entry, protection and facilitation of investment, establish the Zimbabwe Investment and Development Agency, and provide for the One Stop Investment Services Centre. ZIDA has Five Designated Zones identified as SEZs: Victoria Falls, Harare, Bulawayo, Mutare and Beitbridge. These areas have vast investment opportunities ranging from the construction of Convention centres, hotel accommodations, shopping centres, industrial parks, and logistic hubs to mineral beneficiation, agro-processing, manufacturing, power generation, and tea and coffee plantations, among others. 

 

These SEZ-designated areas have a variety of incentives that forward-looking companies want to take advantage of. The incentives are only granted to companies operating within the zones, and these opportunities include; (1) zero-rated Corporate Income Tax for the first 5years of operation with a corporate tax rate of 15% applying after that, (2) a special Initial allowance of 50% of the cost from year one and 25% in the subsequent two years (3) specialized expatriate staff will be taxed at a flat rate of 15% (4) exemption from Non-residents withholding tax on fees on services that are not locally available (5) exemption from Non-residents withholding tax on Royalties (6) exemption from Non-residents withholding tax on Dividends (7) 100% rebate on customs duty for all imported equipment, machinery and raw materials. The concept of Special Economic Zones in Zimbabwe is to re-engage with the international business community and job creation and increase exports and inflow of foreign currency. The Introduction of the One Stop Investment Services Centre through different desks has cut down the bureaucratic pathologies the investors faced due to the need to visit at least 15 offices to acquire the required licenses. For these reasons and efforts made by the government and private sector, it is ideal to invest in Zimbabwe because it is open for business and desperately needs investors to revamp its economy.

 

Gleam Consultancy is there to assist clients at various stages of the SEZ project to get the desired results. These are some of the services we offer:

  • SEZ and Customs legislation interpretation
  • Operationalization of Customs Controlled Areas (CCAs) under SEZs in Zimbabwe
  • Special Applications and submission of Applications to the Zimbabwe Investment Authority
  • Incentives under the SEZ Act in Zimbabwe
  • Feasibility Studies

For more details, please feel free to contact us at info@gleamconsultancy.co.zw or +263242711971/ +263773065062

Tanatsiwa Dambuza (MSc International Trade & Diplomacy) is a Research Assistant at Gleam Consultancy

 

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