HARARE - Zimbabwe’s foreign direct investment inflows remain stagnant, with the country receiving $400 million in 2013, unchanged from 2012, the latest United Nations Conference on Trade and Development (Unctad) report says.
According to the report, released this week, the $400 million represents just three percent of total FDI into southern Africa last year.
This exposes investment starved Zimbabwe’s incapacity to attract meaningful FDI, it desperately needs to jump-start its faltering economy.
Zimbabwe’s economy, predicted by government to grow by 6,1 percent this year, gradually sliding into recession, with the World Bank forecasting only a two percent gross domestic product (GDP) growth this year.
Nigel Chanakira, the Zimbabwe Investment Authority (Zia) chairman, has said approved investment projects in the five months to May 2014 reached $400 million on the back of renewed interest in the mining sector.
“If we go by comparison, $400 million is equivalent to what was approved and what was invested last year, so already our expectation of saying we will probably hit the $1 billion mark this year is realistic based on projections,” he said.
Chanakira noted that Zimbabwe is expecting to attract $2 billion in planned investments next year on the back of the creation of special economic zones enjoying preferential investment terms, as well as anticipated greater clarity on the foreign ownership policy.
Economists, however, say the $2 billion target will require major policy shifts from the government and are sceptical this will happen.
President Robert Mugabe’s Zanu PF party last year unveiled an economic blueprint, Zimbabwe Agenda for Sustainable Socio-Economic Transformation (ZimAsset), but like other such documents, it is has not excited economists and business executives.
Statistics from the government indicate that since 2009, FDI-GDP ratio had averaged 15 percent, less than half of the amount required.
This means that the southern African country, which ranks lowly as an investment destination according to the World Bank, faces a Herculean task of attracting more foreign capital.
Market commentators blame the country’s indigenisation and empowerment policy, which compels foreign-owned companies to sell controlling stakes to locals, for driving away investors.