Legal Discussions with Vengai Madzima: Diaspora Investment in Property Development and Construction In Zimbabwe

NewZimbabwe.com has invited Mr. Vengai Madzima, the Senior Partner at Madzima Chidyausiku Museta Legal Practitioners (MCM Legal), to discuss legal issues affecting Zimbabweans living in the diaspora. The discussions are general and those seeking specific legal advice should contact their lawyer.

Reporter: Welcome back Mr. Madzima, last week we spoke about the legal issues affecting investing in agriculture, a growing industry with huge future potential for the country. This week we want to discuss investment opportunities available in construction and property development in Zimbabwe. What are the opportunities available for the diaspora market?

 VM: Thank you

There is an infrastructural development boom happening at the moment in Zimbabwe. New residential, commercial (malls) and industrial developments are sprouting around the country. More exciting is the unlocking and creation of value in urban land that was previously under-capitalized. An easy example is the conversion of single-family properties into multi-family properties, be it through the construction of clusters or flats unlocking value in exponential ways. For example, property may have been worth US$300 000 as a single-family home, a conversion into multi-family units on the same property may unlock securitised credit potential north of US$2 million.

It is delightful to see the return of building cranes in our cities and, the expansion of construction projects away from just residential to commercial and light industrial spaces and warehousing.  In the past 5 years alone on E.D Mnangagwa Road (previously known as Enterprise Road) in Harare, there has been construction of 3 shopping complexes with one underway. This exerts pressure on existing property owners or shopping centres to reinvest, renovate or suffer a slow death.

This phenomenon is happening around the country and it is both government and private sector driven.

Reporter: What measures should the diaspora take into account if they also want to invest in property developments?

VM: Well if we take the background that a significant number of the diaspora community left Zimbabwe around the year 2000 and if we use that diaspora as an example, to push it further, we assume that the person living in the diaspora is not a frequent visitor to Zimbabwe to understand or comprehend the shifting trends. I would suggest to such a person that they start by engaging a local expert who understands the current and future needs of the class of people that the diaspora intends to attract. A lot of businesses in high-traffic centralized areas failed to foresee the shopping preferences of the high-end market and remained in these areas to their demise. The investor has to also understand the regulatory framework governing the construction industry and exchange control laws where there is intention to repatriate funds is of paramount importance.

Reporter: You mention the regulatory framework for construction, what permits or licences are required to construct a building or structure in Zimbabwe?

VM:  I will start with a land use permit from the local authority which ensures that the building or structure under construction complies or is aligned with what the land is zoned for. You will then require a building permit for the construction or alteration of any building. These architectural or engineering design approvals are necessary to ensure that the building will meet the required standards. Certain projects will have a mandatory requirement that the developer obtain an Environmental Impact Assessment report and submit it to the Environmental Management Agency for approval before commencing the project. An occupancy certificate will be issued on completion to certify that the building is safe for occupation.

Reporter: In the event that contractors do not build according to agreed specifications, what are the remedies available?

VM:  The answer to your question will normally be found in the contract governing the principal and contractor. I will answer in generic terms, if possible, the injured party may start by allowing the contractor the opportunity to rectify the defects. Where it is impossible to do so, a party may elect to cancel the contract. Where the breach is significant and incapable of remedy a party can claim general or special damages. In some instances, a claim for restitution for payments expended may be sufficient.

Reporter: What should a person do in instances where a family member or friend claims to have built a property on behalf of a person in the diaspora only to find there is nothing has been done?

VM: Well this is unfortunate but common. The elephant in the room is the relationship. How one navigates that and ensures that they get compensation will be guided by the specific circumstances of each case. Mediation or arbitration may be appropriate dispute resolution methods to consider. There is always that option for criminal or civil charges against the offending party. What is important whichever method one decides to pursue in light of the circumstances of that particular case is that there is documentation and records of instructions and receipts of money.

Reporter: Thank you, Mr. Madzima we have to end here. We look forward to next week’s discussion.

VM: Thank you.

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Vengai Madzima is a Senior Partner at Madzima Chidyausiku Museta Legal Practitioners (MCM Legal) in Zimbabwe and can be contacted at [email protected]

NewZimbabwe.com will have another discussion on legal issues affecting our readers in the diaspora next week, share your comments and experiences with us.