Questions have been raised over the veracity of Zimbabwean president Emmerson Mnangagwa’s claims that the country has attracted more than US$11bn in foreign direct investment commitments.
A recent FDI Intelligence report expresses scepticism. Dr Prosper Chitambara, a development economist with the Labour and Economic Development Research Institute of Zimbabwe, was cited in the FDI report as saying the US$11bn could be an “overstatement” based on pledges by companies interested in investing in the country when the conditions are right, and after the holding of free, fair and credible elections.
“These are not monies that have actually come into the country. Not even South Africa or Mozambique, who are two of the biggest recipients of FDI in sub-Saharan Africa, have attracted those levels of investment,” he said. Chitambara added that so far there had not been many political attempts to attract investor interest, apart from the repeal of the contentious Indigenisation and Economic Empowerment Act. However, while not much has changed, he conceded that there was a lot of investment hope pinned on the “potential of the country”.
“Investors are positioning themselves for huge potential rewards when we hope to see the implementation of bolder structural reforms by the newly elected government that will improve the ease and the cost of doing business,” he said. Zimbabwe financial correspondent and analyst, Tawanda Karombo, pointed out that a $1.4-billion fiscal deficit in the first half of the current year was the biggest economic challenge facing the new government, along with cash shortages that had persisted.
“This makes it difficult for Zimbabwe to import materials needed to spur industrialisation,” he said. Karombo further pointed out that Zimbabwe was saddled with a high external debt position, which was frustrating efforts to seek new funding. Zimbabwe economist John Robertson agreed that investors were still concerned with the Zimbabwean business climate which they deemed “hostile” compared to other Southern African Development Community (SADC) destinations.
“To ensure sustainability of policies to lure investment into the country, there is need to review the general cost of doing business locally. Key aspects here include royalties to miners, taxes to manufacturing entities, cost of electricity, and lastly foreign currency allocations,” he said.
