BY FIDELITY MHLANGA
THE success of the recently gazetted Victoria Falls Special economic zone (SECZ)as an international financial services centre will be determined by the broader economic environment prevailing in the country, analysts have said.
Finance and Economic Development minister Mthuli Ncube last week designated the Victoria Falls Special Economic Zone as an international financial services centre.
The declaration is contained in Statutory Instrument 4 of 2022 cited as Banking (Declaration of the Victoria Falls Special Economic Zone as an International Financial Services Centre) Notice, 2022.
An international financial services centre deals with flows of finance, financial products and services across borders.
Economist Prosper Chitambara said what would attract inflows was the broader macro-economic issues prevailing in the country.
“I think generally it’s a good thing that Victoria Falls has been designated as a special economic zone,” Chitambara said.
“But ultimately what will determine capital inflows into the country or capital investment into the country are the broader macro-economic issues which engender confidence among investors and which enhance return on investment. So what’s important is to make sure there’s a stable macro-economic environment and that structural impediments in terms of doing business, and in terms of institutional reforms are removed to make Zimbabwe attractive and rather to make Victoria falls a very attractive financial sector.”
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Another economist Victor Bhoroma said SECZs were key in channelling foreign investment to remote or strategic areas of the country which may ordinarily be marginalised but also facilitate illicit financial flows.
“International Finance Centres attract global capital which is key for stabilising the local financial sector. They help in attracting visitors to the resort which promotes infrastructure development in the town. The centre can create thousands of jobs while building the capabilities of the local workforce in terms of managing securities, investments, insurance, and other services for the investors,” Bhoroma said.
On the downside, he said IFCs facilitated illicit financial flows which may aid corruption and tax evasion locally and in other countries.
“Special Economic Zones may be taken advantage of by unintended beneficiaries or politically connected firms who end up enjoying unlimited but undue tax breaks or subsidies,” Bhoroma said.
Last year the government announced joint ventures for the Special Economic Zones falling under the purview of the Ministries of Environment, Climate, Tourism and Hospitality Industry.
Cabinet declared that Mosi Oa Tunya Development Company (MOTDC), a parastatal under the Ministry of Environment, Climate, Tourism and Hospitality Industry, procured Old Mutual Life Assurance Company Zimbabwe (OMLAC), to finance and undertake the feasibility study for the development of bulk infrastructure at a cost of US$430 948.29.