1 July 2014

Zimbabwe: Indigenisation Discord Puts Investors Off, Official

THE Government must be clear on its indigenisation laws and policy as the on-going policy discord is affecting efforts to attract foreign direct investment (FDI), parliament was told this week.

Appearing before a parliamentary committee on Foreign Affairs, Zimbabwe Investment Authority (ZIA) officials said the despite huge potential, the country continues to lag behind in FDI inflows compared to regional countries and this could be attributed to policy inconsistence.

ZIA CEO, Richard Mubaiwa told parliamentarians that policy inconsistencies, debt overhang, liquidity constraints and a high-cost-zone tag have militated against efforts to attract more FDIs.

"In terms of the policy framework, investors strongly feel that there is need for consistence and clarity. We have had a lot of contradictions regarding economic policy, in particular the indigenisation law," he said.

"What we get when we talk to or engage investors is that they want consistency and clarity of policy, particularly the one on indigenisation and economic empowerment."

According to figures from the United Nations Conference on Trade and Development, South Africa was the biggest recipient of FDIs to Africa last year, while Mozambique attracted a record US$7 billion worth of FDIs.

In 2013, Zimbabwe managed to attract a mere US$400 million in FDIs.

Opposition parties and economic analysts have blamed the empowerment law which compels foreign owned companies to cede 51 percent stakes to local blacks as the reason why investors were shunning Zimbabwe.

"We hope that there will be some effort from government and Parliament to actually bring some clarity in this respect. I think investors get confused when statements are uttered which are conflicting, especially from government," he said.

Just recently, government ministers gave conflicting statements over the said amendments to the Indigenisation law with finance minister, Patrick Chinamasa saying the law would be altered while Francis Nhema, the minister responsible for the administration of the Act refuted the statement.

"So we really hope that we as government, as Zimbabweans, we will be able to have one position which everyone can articulate to investors," said Mubaiwa.

He said FDI inflows have nearly doubled to $440 million between January and May compared to the same period last year after indications that the empowerment regulations could be toned down.

Nhema recently said that compliance demands for investors in the resource sectors such as mining were different from those in the non-resource sectors.

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