• Move tailored to promote investment • Partnership projects to be monitored
Cabinet has approved a Joint Venture Bill to stimulate growth, unlock value in the economy and to support major projects, especially infrastructure development in various sectors.
The Bill, which is a major boost for Zim-Asset and a demonstration of Government’s commitment to implementing policy, seeks to promote investment by providing guidelines for the implementation of joint venture agreements between Government and the private sector, both domestic and foreign, by establishing rules governing public-private partnerships.
It will come into force once President Mugabe gazettes it as a Statutory Instrument.
The Bill also establishes a Joint Venture Unit (JVU) which will be a department of the Ministry of Finance and Economic Development and under direct control and supervision of the permanent secretary.
According to the Bill, approval of JV agreements will be the preserve of Cabinet after recommendations from the committee.
This will ensure transparency and that the Government and the investment partner are not prejudiced.
The Secretary for Finance and Economic Development will chair the Joint Venture Committee (JVC) comprising secretaries for the ministries of Industry and Commerce, Transport and Infrastructural Development, Energy and Power Development, Local Government, Public Works and National Housing and Justice, Legal and Parliamentary Affairs.
A representative of the Attorney General at the level of director and director of the JVU will complete the committee.
The committee will be responsible for assisting the minister of Finance and Economic Development to formulate policy guidelines on joint ventures and to ensure that all projects are consistent with national priorities specified in the relevant policy on joint ventures.
It will also be expected to make recommendations to Cabinet as to whether to approve or reject project proposals submitted to it by the JVU.
The JVU 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 whether they are competitive or not.
The Unit will also be responsible for examining requests for project proposals to ensure they conform with approved feasibility studies, advise Government on joint venture projects generally and develop best practice guidelines in relation to all aspects of joint ventures.
They will also be responsible for assisting the committee to formulate policy in relation to joint venture projects and to develop awareness of joint ventures in Zimbabwe as a vehicle for economic development and delivery of public services.
Whenever, Government or any of its parastatals or enterprises want to enter a joint venture, they are expected to invite for applications where appropriate through public advertisements in the media, undertake or cause to be undertaken a feasibility study where it considers that a project may be implemented under an agreement and submit it to the JVU for its approval.
Reserve Bank of Zimbabwe Governor Dr John Mangudya said the bill was a move in the right direction as it seeks to promote investments. “Any law that promotes investments in this country is welcome. The JV law is one of the ways that Government can use to stimulate production is through investments. JVs are also a good tool because they promote equity investments rather than expensive debt.”
CZI president Charles Msipa hailed Govrnment for approving the law saying it creates a framework for investment.
“It has been long in coming. If you think about the infrastructure deficit, many of these; be it power, water or roads, will require significant capital, which is not available in the country. There has been keen interest from investors to invest in infrastructure, but what has been missing was the framework for these PPPs,” Mr Msipa said
Financial analyst Jerome Negonde said the law provides a framework and process through which prospective investors can come together in undertaking investments. “More often than not, the lack of a proper guideline has seen Government or companies being prejudiced and cheated out of joint venture agreements. They clarify the level of entry and how a foreign investor can partner local companies. The law will promote investments into infrastructure development in line with Zim Asset.”
Types of Joint Venture Projects covered by the Bill include Power generation plants and power transmission and distribution networks, roads and bridges, inlands ports and harbours, inland container depots and logistics hubs as well as gas and petroleum infrastructure such as refineries, storage depots and distribution pipelines.
Water supply, treatment and distribution systems, solid waste management works, renewable energy works and educational and health care facilities are also covered by the Bill.
The other sectors are urban transport systems, housing, information communication technology projects and agriculture and irrigation development are other sectors identified by the Bill.
Types of Joint Venture Agreements are Build and Transfer (BT), Build, Lease and Transfer (BLT), Build, 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).
The other JVAs are 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.