In 1995, the U.S. trade surplus with Zimbabwe was $24 million, a shift from a
$10 million trade deficit in 1994. U.S. merchandise exports to Zimbabwe were
$122 million, up $29 million or 31 percent from 1994. Zimbabwe was the United
States' one hundred second largest export market in 1995. U.S. imports from
Zimbabwe totaled $98 million in 1995, $4 million less than in 1993.
IMPORT POLICIES
Zimbabwe's tariff regime must be viewed in the context of an economy that is
in transition from a statist, highly controlled model to an open, market-based
economic system. During the first phase of its structural adjustment program
that ended in 1995. Zimbabwe abolished quantitative restrictions in favor of a
tariff-based trading system. In early 1996, Zimbabwe undertook a comprehensive
review and rationalization of its tariff policies and rates with substantial
World Bank input and the cooperation of the Confederation of Zimbabwe Industries
(CZI), but results are pending. Rationalization is not expected to mean removing
all duties on raw materials as desired by the manufacturing sector and CZI, but
rather a general lowering of duties on raw materials and other inputs, removing
the anomaly of higher duties on raw materials than on finished products.
Tariff rates applied to processed agricultural imports are high, ranging from
20 percent to 45 percent. As of early 1996, the tariff on ready-to-eat cereals
is 25 percent, plus an import tax of 15 percent, and a 10 percent surcharge on
product on a cost, insurance and freight (CIF) basis. The effect of such high
tariffs has been to preclude U.S. firms from pricing specific processed
agricultural goods within reach of the average consumer, thereby handicapping
their ability to develop the domestic market. High tariffs on imported tobacco
cartons also have been reinstated. The high rates on agro-processing products
reflect the power of the commercial farmer lobby in Zimbabwe.
On the other hand, free access to foreign exchange, abolition of import
licensing, and establishment of the Zimbabwe Investment Centre (ZIC) have
greatly increased U.S. firms' access to the Zimbabwe market. The Export
Processing Zones (EPZ) and certain related tax concessions should boost foreign
investment, but there is a restrictive requirement that eligible companies
export at least 80 percent of output. The Zimbabwe government appointed a Board
for the EPZ authority which is expected, after a long delay, to become fully
operational soon.
INVESTMENT BARRIERS
The Government of Zimbabwe, in an effort to radically improve its investment
climate has eliminated the most onerous restrictions on foreign investment. It
recently permitted pre-independence investors to remit 100 percent of declared
dividends and removed restrictions on local borrowing. In September 1995, the
Reserve Bank of Zimbabwe (RBZ) took more steps toward liberalization. It removed
most restrictions on repatriation of blocked profits and dividends accrued on
pre-1993 investments. The RBZ permitted blocked corporate funds in Government of
Zimbabwe external bonds and those in blocked accounts with authorized dealers to
be repatriated over a three-year period. It also authorized Zimbabwean travelers
to take in cash up to $500 or its equivalent in other foreign currencies and to
use credit cards abroad.
Zimbabwe and the United States signed an OPIC Agreement in 1990, and Zimbabwe
also is a signatory of the World Bank's Multilateral Investment Guarantee
Agreement (MIGA). However, it has not yet embraced the concept of national
treatment and has a sizable "reserved list" of sectors open only to domestic
investors or to foreigners in joint ventures with local partners. The RBZ must
approve remittances for royalties, technical services and management fees.
Other problem areas remain. Serious complaints by U.S. firms and others about
the lack of transparency and fairness in the Government of Zimbabwe's tender
process on two major energy and telecommunications tenders resulted in long
delay of tender awards, highlighting the adverse impact on foreign investment by
the lack of a level playing field. The combined total of the tenders could
result roughly in a $25-100 million increase in U.S. exports. A RBZ ruling on
the amount and rate of disinvestment is blocking free access by U.S. petroleum
companies to their share of almost $3 million in funds paid by the government of
Zimbabwe for use of storage facilities at a refinery owned but closed down by
the investors. The RBZ has approved release of the funds to the refinery owners
over 20 years at four percent interest. It steadfastly refused to authorize, as
requested in this case, the preferred "currency switch deal" option, allowing
the investors to swap currency in the account with that of investor(s) outside
the refinery deal who may wish access to Zimbabwean dollars. The RBZ
discontinued currency switch deals in December 1994 after reported abuse.
Another roadblock to foreign investment is delay in Government of Zimbabwe
processing of work permits for representatives of U.S. firms.
LACK OF INTELLECTUAL PROPERTY RIGHTS PROTECTION
Since independence, Zimbabwe has joined international patent and trademark
conventions. It is a member of the World Intellectual Property Organization, the
Paris Convention for the protection of industrial property (Stockholm Text) and
the Berne Convention for the protection of literary and artistic works (Rome
Text). In addition, while the Government of Zimbabwe seeks to honor intellectual
property ownership and rights, there are some enforcement problems. Audio and
videocassette piracy is the most widespread IPR Issue in Zimbabwe, but the
volumes involved are relatively small. While software bootlegging undoubtedly
occurs by users, pirated software is rarely sold commercially.
OTHER BARRIERS
Parastatals
The Government of Zimbabwe does not have presently a well-defined
privatization program, but it is in the process of canvassing both the public
and private sectors for input into development of a comprehensive program that
will liquidate some parastatals, commercialize others and wholly or partially
privatize the rest. Responsibility for decision-making and implementation of
privatization policy is unclear. The pace of privatization further slowed after
President Robert Mugabe criticized a late 1995 sale of government of Zimbabwe
shares in the Delta Corporation, a large conglomerate, on the Zimbabwe Stock
Market after revenue from the sale did not support the government's
indigenization efforts. A key Government of Zimbabwe goal is to use a
privatization program to increase black ownership of economic assets.
Specifically, there is interest in using sale of State assets to set up a
national investment trust to fuel indigenization efforts and to retire massive
government debt. The Government of Zimbabwe will likely take several more months
of study and liberation before it unveils its plan.
Zimbabwe, for example, has commercialized all of its agricultural marketing
boards and intends ultimately to privatize several of them. It has committed
itself to selling off its stake in a sizeable number of publicly traded firms.
The majority-government owned cotton company of Zimbabwe (CCZ), formerly the
Cotton Marketing Board (CMB), and the Dairy Company of Zimbabwe (DCZ), formerly
the Dairy Marketing Board (DMB), now work as private commercial enterprises. As
promised, the government ended a cotton subsidy which had violated the terms of
the World Bank second credit's First Tranche. All parastatals, including the
CCZ, must now pay tax and declare dividends. The World Bank identified a Polish
team to manage the Zimbabwe Iron and Steel Company (ZISCO), with a view toward
improving the company's balance sheet. ZISCO, a major loss-making Government of
Zimbabwe-owned company, and an Anglo-French Consortium signed a $616 million
agreement to revitalize the former. However, as of early 1996, no progress has
been made, and the agreement will expire in May 1996.
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