Zimbabwe to exempt Special Economic Zones from labour and indigenisation laws

Zimbabwe’s Bill on Special Economic Zones (SEZs) proposes to exempt businesses from restrictions imposed by the country’s labour and local ownership as the government tries to court investors, but labour unions argue the move would undermine workers’ rights.

The Southern African country — which ranked 171 out of 189 on the World Bank’s ease of doing business index in 2014, partly because of its labour laws which make it difficult for companies to retrench even in cases of underperformance — has touted the setting up of SEZs as a key pillar in attracting scarce foreign direct investment (FDI).

The Special Economic Zones bill proposes to exempt investors licenced in the zones from the provisions of the Labour Act as well as the Indigenization and Economic Empowerment Act.

Zimbabwe’s current Labour Act was hastily revised to the curb rights of employers to terminate job contracts on notice, confirmed by a July 2015 Supreme Court ruling which led to over 25 000 workers losing their jobs, according to trade union statistics.

The Indigenisation Act, which was enacted in 2008, requires foreign owned companies valued at over $500 000 to cede 51 percent to black locals, which analysts say is not ideal for an economy battling to recover from a decade-long recession.

“The Labour Act (Chapter 28:01) and the Indigenisation and Economic Empowerment Act (Chapter 14:33) shall not apply in relation to licenced investors operating in a special economic zone,” reads Section 56 (1) of the Bill.

Labour guidelines in the SEZs will be determined by the Zimbabwe Special Economic Zones Authority in consultation with the labour minister.

A Zimbabwe Congress of Trade Unions (ZCTU)’s official, Jokoniah Mawopa, who attended a public hearing on the bill in Harare today said that the provision was an attack on the labour movement.

“As labour we are appalled by this proposal and we are not going to allow the special economic zones to take away workers’ rights. Like any other investor (SEZs investors) should be guided by the Labour Act,” he said.

Zimbabwe has performed poorly in the region in attracting FDI.

Official data shows that the country received a paltry $1.8 billion in FDIs between 1980 and 2013, compared to neighbours Zambia which attracted $8 billion and Mozambique at $16 billion over the same period.

In 2014 FDI inflows to Zimbabwe amounted to $545 million – less than five percent of GDP.- The Source

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