12 July 2012

Zimbabwe: Let's Step Up Efforts to Lure Investors


Reports this week that Foreign Direct Investment into our country doubled last year to US$387 million brings good news at a time the economy is thirsting for capital injection.

The economy needs to build on the momentum for Zimbabwe to claim its fair share of the investment cake.

FDI inflows form one of the major pillars on which the economy should lean. This is clearly enunciated in the Medium Term Plan.

Sectors such as mining, tourism, retail, transport and services have remained attractive to the investor.

However, before we begin to beat our chest about the latest figure, it would be critical to put it into perspective.

While the current receipt is a significant improvement from the US$166 million registered in 2010, Zimbabwe is still performing dismally in terms of attracting investment.

An economy our size should be receiving billions of dollars worth of investment annually given the huge resources at our disposal.

The country is endowed with natural resources that should leave an investor with no choice but to invest.

Inflows that have come this way are a small fraction of the U$S6,3 billion received by southern Africa and the US$42,6 billion that the entire continent registered.

Smaller economies such as Mozambique managed to rake in US$2 billion while a quarter of that amount was a very difficult feat for Zimbabwe to achieve.

Where are we getting it wrong as a country?

Of course we cannot downplay the effects of the illegal economic sanctions imposed by the West and the negative reviews this country continues to get on the international arena regarding our ability to attract the discerning investor.

The global economic crisis has also ushered stiffer competition for the fewer dollars that investors set aside to beef their portfolios.

But barring these impediments, the strides made in terms of economic growth figures in this country have not been matched by deliberate and aggressive efforts to lure the investor.

Furthermore, the investment approval process has remained unnecessarily long despite assurances two years ago that this would be a thing of the past.

The one-stop shop under the Zimbabwe Investment Authority is still to materialise. It still takes 49 working days to approve projects, a figure that will be reduced to five once the facility is in place.

We are told that this process will take at least 18 months which effectively means the new system will become operational in 2014.

Zimbabwe has not fared well on the Global Doing Business Index and it will need to work on the business environment to start attracting meaningful investment.

However, for this country all hope is not lost. We have seen investors from China, India, Italy, South Africa, Germany and the United States, among others expressing eagerness to set up shop in this country.

Let us harness this interest as we seek to improve the current business conditions and the general investment environment.

As we await the one-stop facility, there is more we could be doing as we seek to attract higher levels of investment.

Ensuring macro-economic instability, political harmony, policy consistency and other such facets will make this country more attractive to investors.

The rate of inflation has largely remained in the single digit territory while investment opportunities abound, mainly in the mining sector.

These factors, buttressed by an easier project approval process, will see Zimbabwe register more investments.

It would be critical to avoid such pitfalls as the inconsistency noted in the Essar deal to revive Ziscosteel. Such bleeps and blunders scare away investors.

Furthermore, perceptions surrounding the indigenisation policy will need to be managed well to attract investment.

It is no secret that most investors are finding the policy unpalatable but the onus is on the Government and other stakeholders to raise awareness on the objectives and implementation matrix surrounding indigenisation.

Zimbabwe is a good product that just needs proper marketing.

The economy needs to create jobs, generate wealth and consequently alleviate poverty. FDI has a role to play in ensuring that this materialises.

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