THE gazetting of the Joint Ventures Act by the government last week has kindled hope to Zimbabwean businesses and the economy at large.
Given the challenges in accessing long-term funding for industry retooling from financial institutions and lack of support for new business enterprises, we believe the promulgation of the new investment law will go a long way in attracting both domestic and foreign investors and help rescuscitate ailing companies.
The new law was gazetted after being passed by Parliament and later received President Robert Mugabe’s assent.
The Act provides for the creation of a Joint Venture Unit to be housed under a department of the Ministry of Finance and Economic Development under direct control and supervision of the permanent secretary.
The unit will be responsible for considering project proposals submitted to it and assess whether or not they are affordable to the government or any of its parastatals or enterprises intending to enter such agreements, providing value for money, providing optimum transfer of technical, operational and financial risks to the prospective investor as well as whether they are competitive or not.
We applaud the government for taking such a bold policy investment stance, which is in line with the modern economic trends across the globe.
Through joint venture agreements local businesses, both private and public, will now be able to engage partners and develop new entities and assets by contributing equity.
We believe this will foster expansion of existing business and create more job opportunities for thousands of unemployed professionals and ordinary people in different sectors of the economy.
Under this arrangement, parties will exercise control over the enterprise and consequently share revenues, expenses and assets, which is an incentive for investment.
The government has made it clear that the new Act will stimulate economic growth by unlocking value and supporting major investments across all sectors.
Economic experts have long pointed to the need for adoption of the joint venture approach particularly in undertaking high cost projects in sectors such as energy, public infrastructure and road developments.
We believe such projects have the capacity to broaden the country’s economic base within a short period given their downstream effect and linkage to other economic sectors including the manufacturing industry.
Hopes are also high the new law will provide for the implementation of joint venture agreements between contracting authorities and counter-parties while at the same time establishing a set of rules governing the public-private procurement process.
Industrialists have also voiced their happiness with the new Act, which is set to close the investment gap in revamping the manufacturing sector with a bias towards processing industries.
We feel the government and business community now need to fine-tune other pieces of legislation to enhance the ease of doing business and competitiveness hurdles to ensure the success of joint ventures in the country.
The arrangement also dovetails with aspirations of the government’s economic blue-print, the Zimbabwe Agenda for Sustainable Socio-Economic Transformation (Zim-Asset), which is premised on leveraging natural resources through value addition and beneficiation for increased earnings.
The challenge is now on businesses and entrepreneurs to take advantage of the new Act to derive benefits of joint venture projects.
Joint venture agreements come in the form of Build and Transfer (BT), Built, Lease and Transfer (BLT), Built Operate and Transfer (BOT), Build, Own and Operate (BOO), Build, Own, Operate and Transfer (BOOT), as well as Build, Transfer and Operate (BTO), Contract, Add and Operate (CAO), and Develop, Operate and Transfer (DOT) categories.
Examples of such arrangements include but not limited to Rehabilitate, Operate and Transfer (ROT), Rehabilitate, Own and Operate, Build Own, Operate and Maintain Contract, Lease Management Contract, Management Contract, Service Contract, Contract for Services and Supply, Operate and Transfer.