HARARE - Bilateral Investment Promotion and Protection Agreements (Bippas) do not prevent government from compulsory acquisition of assets from investors, Finance minister Patrick Chinamasa said.
The Treasury chief told Parliament last week that government would only have to compensate the investor.
“Under the Bippas, government is not prevented from compulsory acquisition of assets. It is required to pay compensation,” Chinamasa said.
His remarks come as lack of respect for property rights — coupled with mistrust — is one of the major factors deterring foreign direct investment into Zimbabwe.
A Bippa is an agreement establishing the terms and conditions for private investment by nationals and companies of one state operating in the territory of another state.
It further provides for unrestricted transfer of returns from investments and defines procedures for the resolution of disputes, should they arise.
Therefore, Bippas offer companies and individuals from investor countries increased security and certainty under both domestic and procedures for the resolution of disputes should these arise.
However, Zimbabwe is notorious for violation of property rights, despite having signed several Bippas.
In 2000, government embarked on the Land Reform Programme and some farmers who were protected under Bippas lost their farms.
In response to concerns over the violation of Bippas in the implementation of the land reform programme, Chinamasa said there was nothing amiss.
“Under those Bippas, which you allegedly say were violated, the only shortcoming was that we failed to raise the money to pay compensation, but there was no violation,” he said.
Chinamasa also spoke about the Bippa between Zimbabwe and Kuwait, which was ratified by Parliament.
“The essence behind operationalising the Bippa with Kuwait is to enhance Kuwait investor confidence in Zimbabwe as a safe and viable investment location as well as from the Multi-lateral organisations against expropriation and nationalisation and providing procedures for compensation should these occur,” the former Justice minister said.
He said Bippas are meant to encourage companies and individuals to invest in the country.
This comes as the Britain’s deputy ambassador to Zimbabwe Chris Brown recently said British investors are interested in venturing into Zimbabwe but remain worried about the perceived lack of respect for property rights and uncertain business climate.
He said the country should enforce investor friendly policies, including reviewing its indigenisation policy.
“Zimbabwe should look directly at the elephant in the room, the continued uncertainty over the implementation of the Indigenisation and Economic Empowerment,” Brown told a Zimbabwe National Chamber of Commerce (ZNCC) conference.
He added: “If government does not soon articulate a clear approach, one that achieves empowerment yet respects property rights, Africa will continue to rise without Zimbabwe.”
“Zimbabwe should therefore follow an investor-friendly path and this alone would give a seven percent GDP growth per year. This is ignoring her abundant agricultural resources and exceptionally-educated labour force,” Brown said.
He said investors will continue shunning the country if their concerns about the business climate are not addressed.