The Herald (Harare)

Zimbabwe: Foreign Investors Adopt a Wait and See Attitude

THE investment appetite among foreign investors has largely been subdued this year as the country grappled to clear negative perceptions around indigenisation and empowerment laws and uncertainty over the country's political reforms. According to Zimbabwe Investment Authority, proposals worth US$821 million were approved in the 10 months to October, and with only a month left to the end of the year, approved projects this year are unlikely to match last year's.

The investment authority approved projects worth close to US$7 billion last year.

While the approved projects may not translate into real foreign direct investment, that could be used to determine foreign investors interest in the country.

"I think there is still an issue of perception, where investors perceive the country as not being an easy place to do business and also as a risky place," ZIA chief executive Mr Richard Mbaiwa said recently in an interview with the Herald Business.

He said there has been a wrong perception that indigenisation was aimed at nationalising assets of foreigner investors.

The indigenisation law requires foreign owned companies to sell majority stakes to black indigenous Zimbabweans.

"However we are seeing that there is a steady improvement and if you look at the World Investment Reports published annually by UNCTAD, you will see that there has been a significant increase in investment inflows from as low as US$40 million in 2006 to US$387 million in 2011.

"Again, If I may use the World Investment Report Statistics you will notice that in 2008 total investment inflows amounted to US$52 million, in 2009 it was US$105 million, in 2010 the figure rose to US$166 million and in 2011 it was US$387 million.

"I would attribute the steady increase to the policies that have been adopted by Government including dollarisation, which has brought investor confidence back."

A Harare economist said indigenisation and mixed messages from parties in the coalition Government on political reforms were the major deterrent to foreign investments.

"In an economy where there are mixed massages over policy issues from the Government, it is not easy to encourage investors to start a business. They normally adopt a wait and see attitude.

"The figures can show that the appetite was quite subdued," said the economist.

He however noted that the compliance level by some big foreign owned companies with the indigenisation laws could reignite inventors' confidence.

Some of the companies that have complied or are in the process include Anglo America, Portland Holdings, Old Mutual, BAT Zimbabwe, Zimbabwe Platinum Mines and Mimosa Mining Company.

"That is an endorsement (of the law). Putting politics aside, I think investors are gradually appreciating indigenisation," said the economist.

In the past few months, the Zimbabwe Stock Exchange witnessed an improved participation by foreign investors.

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