Lex Africa Guide 2012 Full - Afrer.org

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ZIMBABWESCANLEN AND HOLDERNESS LEGAL PRACTITIONERSFirm InformationWebsite address: www.scanlenandholderness.comLanguage spoken: EnglishContacts: Sternford Moyo and Joseph MafusireTelephone: +263 4 702561-8Fax: +263 4 700826/702569Email: moyos@scanlen.co.zw and mafusirej@scanlen.co.zwCountry InformationZimbabwe is a landlocked country spanning 390 757 squarekilometres. It has a population of approximately 11.4 millionpeople and more than 60% of the population is based in ruralareas.Economic IndicatorsThe gross domestic product (GDP) for 2011 was US$10.07 billionand is forecast to rise to US$ 11.9 billion in 2012.Inflation RateYear on year inflation as at October 2011 was 4.2%.Investment ClimateZimbabwe is actively trying to attract foreign direct investmentas the country emerges from more than ten years of rapideconomic decline. It has established a ministry responsible forpromoting economic investment and the reintegration of theeconomy in the global market. Investment opportunities areopening up with the privatization of all state owned enterprisesin the iron and steel industry, road and rail transport,communications, agriculture, power supply and other sectors.The country is actively promoting bilateral investmentagreements with other countries and it has already signed onesuch agreement with South Africa which protects investmentsfrom compulsory expropriation. Investors must however takenote of the indigenisation laws which seek to promote theparticipation of indigenous persons in the economy.Forms of BusinessPrivate business corporationsPartnershipTrading trustCo-operativesMultinational CorporationsPrivate limited liability CompaniesPublic liability companiesSole proprietorshipCompany limited by guaranteeJoint venture.Formation of CompaniesCompanies and Private Business Corporations are registered andregulated by the Companies Act. Listed public companies are inaddition regulated by rules of the Zimbabwe Stock Exchange.There is a central registry of companies in Harare and a branchregistry in Bulawayo. Most entrepreneurs avoid the registrationprocess by buying existing shelf companies from law firms.Exchange ControlsExchange control laws are in force but their implementation iscurrently suspended because the country is using currencies ofother countries. Dividend remittances in respect of projectsapproved by the Zimbabwe Investment Centre are allowed at100% of current after-tax revenue profits. Capital is blocked andmay be remitted through 20 year government bonds. Capital ispaid in 10 equal annual instalments at the end of years 11 to 20.Interest is 4% per annum, tax free and payable half yearly.TaxationThe corporate tax rate is 25% plus a 3% aids levy. A levy of 5% isimposed on the net financial profits of registered bankinginstitutions.Value added tax (VAT) of 15% is chargeable on the sale of goodsor services.Profits earned from new projects by companies or individualsoperating in designated growth point areas are taxed at 15% inthe first year in which the operations commence and for fouryears thereafter.Tax concessions are also applied to export manufacturingbusinesses established in designated export processing zones.Dividends paid by a Zimbabwean company to anotherZimbabwean company are not taxable, but dividends earned bynon-residents in Zimbabwean companies are subject to awithholding tax of 15% in the case of stock exchange listedcompanies and 20% in the case of other companies.Capital gains tax is levied on the sale of immovable property atthe rate of 20%. The rate is 5% on immovable property acquiredby the seller before February 2009. Capital gains tax onsecurities is 1%.Double taxation agreements exist with Bulgaria, Canada, France,Germany, Malaysia, Mauritius, Netherlands, Norway, Poland,South Africa, Sweden, the United Kingdom and Yugoslavia.Import/ExportImport controls exist. Zimbabwe is a member of the GeneralAgreement on Tariffs and Trade (GATT). Government hasremoved duty on imports, equipment and raw materials meantfor local industry to promote productivity. Duty on importedcommercial motor vehicles has also been reduced to boost thetransport and business sector.Monetary PolicyZimbabwe suspended the use of the local currency in February2009 in a bid to restore economic stability and stem rampantinflation. Trade is now being conducted in the currencies ofother countries with the main ones being the United Statesdollar and the South African rand. The move has stabilized theeconomic environment and reduced inflation to single digitfigures.Legal SystemThe legal system is based on the Roman-Dutch common law asmodified by statute. The highest court in the land is theSupreme Court followed by the High Courtand then the Magistrate’s Court. There arealso specialised courts like the AdministrativeCourt and Labour Court.Intellectual PropertyProtection is provided by the Patents and87
Trademarks Act. There are public registries for trademarks,industrial designs and patents. Zimbabwe is a signatory to theBerne and Paris Conventions.Financial Services/InsuranceThere are several international and locally owned banksoperating in the country. There are also several buildingsocieties established to provide mortgage finance. There aremany insurance and reinsurance companies operating inZimbabwe.Key Strategic Growth Initiatives by Government/Private SectorThe Government is making significant investments ininfrastructural developments in power generation, roadinfrastructure (entailing the dualisation of major roads) and theconstruction of bridges. It is also working on upgrading airportsand has committed over $33 million towards thesedevelopments. Government is actively seeking private partnersin these areas. Government has also committed over $252million towards supporting the agricultural sector.Treaties and Bilateral AgreementsZimbabwe signed a Bilateral Investment Promotion andProtection Agreement with South Africa in November 2009 andis actively seeking regional partners for similar agreements.Zimbabwe is a member of the Common Market for Eastern andSouthern Africa (COMESA) Customs Union and Southern AfricanDevelopment Community (SADC) agreement on tariffs andtrade.Membership of International and Regional OrganisationsZimbabwe is a member of SADC, COMESA, the African Union,United Nations, World Bank and International Monetary Fund.Road and TransportThe road and rail infrastructure has deteriorated significantlydue to lack of investment by Government. Government isworking on upgrading the infrastructure by dualising roads andreviving and upgrading the rail network. Private sector partnersare being sought to partner the Government in these areas.WaterGovernment is investing significant sums to support localauthorities in the provision of water supplies. Governmentrecently decentralized water services to local authorities havingshortly experimented with centralizing it via the creation of anational water authority. Water supplies are erratic in most citiesand towns and many people resort to borehole water supply fordomestic and commercial purposes.EnergyEnergy supplies remain critically low and power shortages andcuts are affecting manufacturing industries, agriculture,commerce and domestic consumption. Power supplies arebelow 50% of the national demand. Private sector partners arebeing sought for independent power supplies.TelecommunicationsGovernment has committed over $6 million to the state ownedtelecommunication corporation for the creation of a fibre opticlink and further resources for the installationof new radio transmitters.manufacturing sector which is operating at less than 30% of itscapacity.Trade and IndustryThe main trading partner remains South Africa. The industrialsector remains depressed due to scarcity of capital on the localmarket and the absence of foreign direct investment and lines ofcredit from external sources. A ministry specifically responsiblefor trade and industry was established by Government to revivethe sector.Information and Communications TechnologyA ministry focusing specifically on this aspect was recentlyestablished and a new law governing information andcommunications technology is being discussed in parliament.The government has already started investing in the creation offibre optic networks but the levels of investments remain verylow. Private sector players are required to complementGovernment efforts.MiningMining is becoming the largest contributor to the country’s grossdomestic product (GDP). In addition to the gold and chromewhich the country has traditionally produced, platinum anddiamonds are fairly recent discoveries which are dominating thesector.AgricultureThe country has not yet realized the benefits of the land reformprogram with productivity still very low despite significantinvestment by government.Trade and InvestmentGovernment has set up several corporations to promoteinvestment in industry. The small enterprises developmentcorporation was set up to specifically assist the establishment ofsmall businesses, while a bank to support infrastructuraldevelopment also exists. A central one stop investmentauthority is being established to promote foreign directinvestment and remove bottlenecks in the regulatory system.Labour RelationsZimbabwe has a huge pool of labour with 80% of the populationunemployed in the formal sector. Labour relations are regulatedby a labour law with a dedicated court and other structures setup to deal exclusively with labour issues.Significant Country Issues for Investors to ConsiderThere are many investment opportunities as a result of thecountry’s emergence from years of economic decline and thenear collapse of most industries. The country is trying to attractforeign capital to boost economic development. The majornegative factor has been the political environment. Even thoughthis has not completely stabilised, there are encouraging signswith the establishment of the Government of National Unity.The country’s indigenisation policies (requiring 51% indigenousownership) must also be taken into account.88Key Industry SectorsThe main industry sectors are agriculture,mining, telecommunications, and financialservices. There are huge opportunities in the
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Page 38 and 39: occurred). The tax may be paid in t
Page 40 and 41: law in the realm of marriage and su
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Page 44 and 45: Exchange ControlsThe Exchange Code
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Page 56 and 57: MOZAMBIQUECOUTO, GRAÇA & ASSOCIADO
Page 58 and 59: protected by this legislation which
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Page 82 and 83: UGANDAKATENDE, SSEMPEBWA & COMPANY
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