25 June 2014

Zimbabwe: FDI Could Rise to U.S $1 Billion On Essar Deal

THE Zimbabwe Investment Authority seeks to attract $2 billion Foreign Direct Investment per annum, with the authority expecting $1 billion flows this year if the long-standing Essar deal becomes operational, its chairman said. This was after the United Nations Conference on Trade and Development showed that Zimbabwe's foreign direct investment in 2013 was near flat at $400 million and 19,3 percent of the gross fixed capital formation. The FDI is the lowest in the SADC region.

ZIA chairperson Mr Nigel Chanakira said the authority has already approved foreign projects valued at more than $400 million this year. Speaking at the launch of the World Investment Report 2014, Mr Chanakira said the authority has seen an increase in investment inquiries even from British and American investors.

"We will be able to relatively, modestly attract at least $2 billion per annum and that's the target we set for ourselves," said Mr Chanakira.

"This year alone we have 162 investment approvals and we are already at the $400 million mark in terms of approvals this year. Already our expectation of saying we will hit $1 billion mark this year is realistic based on projections.

Mr Chanakira said Government should clarify economic policies in order to create certainty which investors consider as one of the most important indicators.

"But it is next year, once they have clarified the Special Economic Zones and the policy on indigenisation, from our projects we should move in the range of the $2 billion mark," said Mr Chanakira.

ZIA head of operations Mr Sichoni Takoleza said there was a difference in the ZIA and UNCTAD calculations. "ZIA measures the approvals that would have been done while UNCTAD records when an investment has already started groundwork.

"Sometimes you can give approvals which take three to five years to be operational. This is why there is a flat line in the investment inflows in the country; not that investment has not been coming in."

Deputy Minister of Finance Dr Samuel Undenge in a speech read on his behalf said Government is working on improving the investment climate in order to attract FDIs.

The Government is crafting an Investment Policy which should give a policy direction on investing in Zimbabwe and developing a Joint Venture Legislative Framework. The JV legislation framework is expected before the end of the year.

"The JV legislation framework is almost complete now and is at the Attorney General's Office. The process is being hastened," he said.

The Government is also establishing Special Economic Zones which offer preferential treatment to investors who qualify into the SEZs. This should in the process address some barriers to investment while attracting the much needed FDI.

He said prioritising investment for rehabilitation and development of infrastructure, necessary for supporting and attracting investment, driving the economy and enhancing efficiency of the productive sectors becomes critical.

"Therefore, addressing the doing business environment is a key factor in attracting and promoting investment," he said.

The World Investment Report has made suggestions to stimulate private sector investment in sustainable development which include; developing a new generation of investment promotion and facilitation, SDG oriented investment incentives, regional SDG Investment Compacts, new forms of partnership for SDG investments, among others.

The report also suggests enabling innovative financing mechanisms and a re-orientation of financial markets and changing the business mind-set and developing SDG investment expertise.


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