The Herald (Harare)

9 January 2013

Zimbabwe: Zim Investment Falls

Photo: IRIN
Zimbabwe's capital, Harare

ZIMBABWE'S investment approvals fell to US$930 million last year, from US$6,6 billion a year earlier, which analysts say is "illustrative of an abysmal" investment climate. The Zimbabwe Investment Authority approved 172 projects between January and December last year, down from 227 projects approved in the same period in 2011.

Approved mining projects were valued at US$688 million from US$3,6 billion in 2011, while tourism investment approvals were down to US$1 million from US$1,5 billion.

Manufacturing approvals stood at US$58 million last year from US$670 million in 2011.

Approved investment projects in the agriculture and services sector dropped from US$445 million and US$128 million to US$21 million and US$41 million respectively.

But these are just approvals and most of the projects are not yet up and running.

Some projects take time to implement for various reasons, including raising capital, but they will still be in the pipeline. Others will never see the light of day due to various circumstances.

Internationally, an implementation rate of 25 percent and above of the approved projects is acceptable.

ZIA gives investors two years to carry out their investment, failure of which they should advise the authority on the reasons for the delay and their plan to implement.

Economic analyst Mr Witness Chinyama said uncertainty over the country's political reforms has forced investors to adopt a wait-and-see attitude. He cited outstanding external debts, amounting to about US$10,6 billion, as another major cause of the decline.

"The talk of impending elections has led to a lot of potential investors developing a wait-and-see attitude as they feel they have no guarantee with regards to their investment in future," Mr Chinyama said in an interview yesterday.

Zimbabwe is expected to hold elections this year, but no exact dates have been given.

Another analyst, Mr Gift Mugano, said the election talk was "possibly" scaring away investors.

"Election talk sends a negative tone to potential investors who become sceptical," he said.

Mr Mugano also attributed the global economic slowdown as another cause for investment decline.

Last week, economist Dr Eric Bloch said the "fear and wait-and-see approach" being adopted by foreign investors, as a result of indigenisation and empowerment, has dented confidence among investors.

The indigenisation policy requires foreign-owned companies, including mines and financial institutions, to dispose of their majority shareholdings to black Zimbabweans.

ZIA chief executive Mr Richard Mbaiwa said in October last year there was still the issue of perception, where investors perceive the country "as not being an easy place to do business and also as a risky place".

He said there was also an "overhang" from the past where the country experienced serious economic decline.

"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 find 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," said Mr Mbaiwa.

"Again, If I may use the World Investment Report Statistics, you will note 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 into the economy."

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