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REGIONS MIDDLE EAST & AFRICA


Zimbabwedangles sweetenerfor cannabisinvestors


THE COUNTRY’S HISTORIC AND RECENT ABUSES OF INVESTOR TRUST HAS LEFT IT SCRAMBLING FOR FDI. TONDERAYIMUKEREDZI REPORTS


T


he 2019 exit of Precision Cannabis Therapeutics Zimbabwe (PCTZ), the country’s


first medicalcannabis licensee,owing to an investment policy that com- pelled foreign firms to cede a 40% stake to a governmentagency, demon- strates the ever-present complexity of doing business in Zimbabwe. In the country’s 2018 rollout of


the medicinal cannabis sector, private compa- nies were legally required to form joint ven- tures with security forces on a 60%/40% basis, and to grow the cannabis on designated secu- rity services land, apparently because the gov- ernment was terrified of the potential risks of the product finding its way onto the local and international black markets. Nathan Emery, PCTZ’s former chief operat-


ing officer, says after two years of hardwork,his company was hounded out by the appointed government partner not wanting to pay for its 40% shareholding. “I could no longer allowmyshareholders to


be subject to such fly-by-night policies. Yes, we received a refund of $10,000. I know this ‘pol- icy’ has since been rescinded, but it is too late to rebuild any trust in my book, with the history Zimbabwe has presented to those who do not ‘play ball’,” he tells fDi.


Pickingupthe pieces The 60/40 rule and the requirement for licen- sees to farmongovernmentland onlyprompted angst and investor flight. Now, the Zimbabwe Investment and Development Agency (Zida), the country’s reconstituted investment promo- tion agency, is picking up the pieces. Zida has pronounced a cocktail of incentives to woo investments into the budding cannabis sector, including allowing investors to own 100% of their licences and to grow cannabis on land of their choice. “Monetary and fiscal incentives include


100% foreign currency retention for two years (unprocessed cannabis), three years (semi-pro- cessed) and four years (fully processed), repa- triation of income and dividends and zero- rated corporate income tax for five years,” Zida’s chief investments officer, Tinotenda Kambasha tells fDi.


80 Another crucial development has been the


finalisation of the Investment Stability Agreement, a lawthat assures investors of prop- erty rights, protection against expropriation and change in law. Some 20% of the medical cannabis levy is also being ring-fenced to create a Green Industry Fund to finance research development and beneficiation. Mr Kambasha says that, to date, the canna-


bis sector has attracted 55 investors from Canada, Netherlands, the US, Germany, theUK, China and some local companies. No exports have been made yet, but several licensees are already on the ground with some looking to harvest in the second half of the year. The coun- try has been allocated a quota (3 tonnes) to export in 2021 by the International Narcotics Control Board.


Global opportunity Zida anticipates the global cannabis market size to growto $65bnby 2025—US-based Global Market Research estimated its global value at $20.6bn in 2020 — and wants Zimbabwe to exploit the exponential growth by quickly attracting players into the exciting sector. “It is important that we get investment in


this sector. With the anticipation that at least 30%of these licensed investors start operations, we hope to produce 3000 litres of cannabinoid oil in Q3 2021. We hope to grow revenue in the industry to $6bn in the next five years,” claims Raban Masuka, Zida’s chief innovation officer. Peter Rhodes, chairman of the Cannabis


Industries Association of Zimbabwe, a body rep- resenting medicinal cannabis and industrial hemp companies, hails the new incentives by the government as unprecedented. “While the government has provided invest-


ment incentives for large projects before, we don’t believe they’ve done something like this for an entire industry. Apart from financial returns on their investments, investors are attracted to stability and security, and the incentives announced by the government are a big step to achieving these,” he tells fDi. Mr Rhodes says that themove by Zimbabwe


to permit international arbitration to settle any disputes that may arise from the enforcement of the investment stability agreement is amajor sign of positive intent.


www.fDiIntelligence.com August/September 2021


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