Nov 27, 2009, 17:12 GMT
Harare - Zimbabwe and neighbouring South Africa, Africa's most powerful economy, together signed an agreement in Harare to protect investments in each other's country, in a bid to open the stricken Zimbabwean economy to desperately needed foreign business.
The agreement was signed by South African Trade Minister Rob Davies, and Zimbabwean Economic Planning Minister Elton Mangoma. Over 80 senior businesspeople from South Africa, mostly in the mining and minerals sector, attended the function.
The Bilateral Investment Protection and Promotion Agreement (BIPPA) guarantees investors freedom from expropriation in the other's country, as well as the right to seek redress in international tribunals.
'Everybody now seems to appreciate that this is a positive agreement which provides a level of investor confidence that did not exist before,' said Davies. 'There will be recourse to a whole range of mechanisms in the event of a dispute.'
Observers say however that major uncertainties prevail over the sincerity of Zimbabwe President Robert Mugabe in honouring the agreement after a decade of Zimbabwe's flouting domestic and international agreements, which has seen an almost total capital flight.
The agreement also faces severe difficulties over the rights of South African citizens, who - while attempting to run farms in Zimbabwe - have been and continue to be driven violently off their farms due to Mugabe's revolutionary land reform programme.
The agreement is seen as a major advance for the nine-month power- sharing government between Mugabe, and pro-democracy Prime Minister Morgan Tsvangirai, whose economic policies immediately after the inauguration of the new government ended astronomical inflation and stabilized the monetary system by introducing US dollars as the national currency.
'Zimbabwe was departing from the past, and (we) do not want to be judged by what previous governments have done,' Mangoma said. 'There have been arguments that Zimbabwe cannot be trusted because it cannot even sign an agreement with its neighbour. That argument falls away. This BIPPA is signifying to the world that Zimbabwe is open and ready for trade.'
Observers warn however that approaches by South African investors are likely to be highly tentative because of Mugabe's record.
At a United Nations conference on Monday last week, Mugabe told businessmen that they would be forced by a new law to ensure that a 51-per-cent controlling interest of any new foreign investment over 500,000 US dollars would have to be taken up by black Zimbabweans.
Five days later, government ministers in Harare tried to soften Mugabe's threat by saying that the government would be flexible in its application of the law.
As the BIPPA deal was being signed Friday, the Commercial Farmers Union reported that four white farming families were being driven off their farms by mobs in the Chegutu area 100 kilometres west of Harare.
The CFU says not one farmer has been fully compensated for being dispossessed since the seizure of farms began in 2000, despite legal obligations to do so.
The tribunal of the 15-nation regional bloc Southern African Development Community (SADC) declared a year ago that Mugabe's seizure of 4,000 white-owned farms was racist, illegal and violated constitutional property rights.
Zimbabwe is a signatory to the agreement establishing the SADC tribunal but the government declared it would not be bound by it.
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