Zim FDI nosedives

HARARE - The Zimbabwe Investment Authority (ZIA) approved foreign investment projects worth nearly $700 million last year, down from close to $1 billion recorded in 2012.

Statistics from the authority revealed that $685 893 756,58 worth of projects went through between January and December 2013 with China contributing the bulk of the figure at $389 503 848,00.

Economic experts contend that the dip in foreign direct investment (FDI) is a result of the country’s policies – particularly the Indigenisation Act – which dissuade investment.

Eric Bloch, a Bulawayo-based economist said there was need for government to amend some sections of the indigenisation and empowerment law in order to woe more investors.

“There is need to amend the indigenisation law so that it will attract investors. If the conditions are not conducive they end up investing elsewhere where the conditions are favourable,” he said.

Nonetheless, Zimbabwe’s mining sector remains attractive to foreign investors as $214 933 403,88 resources projects were sanctioned.

The services industry came in second at $172 433,616,70 followed by manufacturing, construction, transport, tourism and agriculture at 157 967 049,00,  $129 450 000,00, $5 250 000,00, $3 359 687, 00 and $2,5 million respectively.

Zimbabwe has failed to redeem itself from its “bad boy” image after President Robert Mugabe began violent seizures of white owned farms for redistribution to landless blacks in 2000 and successive disputed elections.

In the following years, the former British colony  hogged international headlines for its controversial Indigenisation Act which compels all companies to be at least 51 percent locally owned and a general lack of policy consistency as well as high levels of corruption that have crippled state institutions in particular.

In 2009, the country formed an inclusive government that failed to change the public perception in terms of doing business with the former government failing to conclude its $750 million iron mining and steel production partnership with Indian firm Essar.

According to the latest United Nations Conference on Trade and Development report, Zimbabwe only received $400 million in FDI in 2012 when other neighbouring nations such as Mozambique and South Africa received $5,2 billion and $4,6 billion respectively.

"Foreign investors are looking at investment security, political stability, respect for property rights and an environment which has an assured high level of law and order," said economist Christopher Mugaga.

He noted that a strained relation between Harare and Europe and the United States is one of the reasons for subdued FDI inflows into the country.

“The Western countries are seemingly the pace setters in influencing the direction of trade and investment and their political clout on the international stage is still intact,” he said.

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