Policy uncertainty weighs down Zim

HARARE - Zimbabwe's uncertain policy environment remains a concern despite the country improving in global competitiveness ratings, a latest World Economic Forum (Wef) said.

In its Global Competitiveness Report for 2014-2015, the think-tank said the southern African nation’s policy environment needs urgent attention.

“(Zimbabwe’s) public institutions continue to receive a weak assessment, particularly related to corruption, government favouritism, and the protection of property rights (138th), reducing the incentive for businesses to invest,” Wef said in the survey.

“The country is yet to work on its policies to attract investment and create confidence,” it said.

The group said despite efforts by Zimbabwe to improve the macroeconomic environment — including the dollarisation of its economy in early 2009, which brought down inflation and interest rates — the country still received a low rank in this pillar (87th).

“The macroeconomic environment pillar is characterised by high government debt, a negative savings rate, and low inflation,” Wef said.

This comes as the investment-starved country is desperately trying to attract foreign direct investment (FDI) and access international lines of credit.

But investors and financiers are wary of its policies, particularly the indigenisation law — compelling foreigners to cede majority shareholding to black locals.

The World Bank has said that five years of investor friendly policies in the mining sector alone could increase annual output by $5 billion.

Foreign investors have failed to react to Zimbabwe’s FDI attraction policies as the country’s FDI figures last year stagnated at $400 million, as shown by a United Nations Conference on Trade and Investment (UNCtad) World Investment Report for 2014.

The country’s investment figures show that FDI figures only doubled in between 2010 and 2011 when the Zimbabwe Investment Authority’s One Stop Shop was introduced in 2010, but the figures have levelled since then.

The $400 million figure was not the lowest in the region, but paled in significance when juxtaposed against that of neighbouring countries.

The UNCtad report also shows that South Africa received the highest FDI in Sadc at $8,1 billion, followed by Mozambique with $5,9 billion.

Zimbabwe’s northern neighbours Zambia received $1,8 billion in FDI last year.

According to the Wef report, other areas of weakness in the country include health which was ranked 129th in the health sub-pillar.

“Low education enrollment rates, with only every second child participating in secondary education; and formal markets that continue to function with difficulty, particularly goods and labour markets, which rank 133rd and 137th, respectively,” the Wef report said.

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