Unabated sabotage of investor confidence

Zimbabwe could readily be a magnetic destination for Foreign Direct Investment (FDI), and such investment would be a catalyst for employment creation, reduction of the poverty that afflicts most people, a source and fuellant of an ongoing favourable trade balance, eradication of fiscal near-bankruptcy, settlement of Zimbabwe’s very considerable international and national debt, and almost all of the other ills that have plagued country’s economy for many years.

Column by Eric Bloch

Notwithstanding the recessions that impacted on the United States, European Union (EU), and various other international economies in recent years, there is still a plethora of substantially-monied enterprises and individuals who continuously seek potentially beneficial investment opportunities.

They stem from South Africa, India, China, the EU, Australia, United States, Canada, Brazil, and many other countries, and they are aware of positive investment opportunities Zimbabwe has to offer.

Those opportunities exist in the mining, manufacturing, tourism, and service provision sectors, among others.

Although Zimbabwe’s mining sector has witnessed some significant development and growth, especially in the gold, platinum, and diamond sectors, the magnitude of mineral resources could enable manifold growth, inclusive of the exploitation of other minerals,like chrome, nickel, lithium, coal and natural gases.

Moreover, a small portion of the mining production presently undertaken is subjected to value-addition by being subjected to industrial production and conversion into finished products.

Manufacturing has contracted intensively in recent years, primarily because of under-capitalisation and failure to keep pace with state-of-the-art technological developments, as well as a result of intensely diminished consumer spending-power, non-competitiveness in export markets, and intensifying competition between domestic production withand imported products.

But, were these factors to be constructively addressed, the manufacturing sector could be a great drawcard for investors, and would attain considerable investor interest and funding, enabling refurbishment and replacement of archaic and derelict plant and machinery, intensified and increased production volumes, re-penetration of export markets, diminution of import competition, and a demand for more employees.

In like manner, the growth potential of the Zimbabwean tourism sector is very considerable, were it not for the concerns of many potential tourists as to security and safety, availability of all needs, readiness of access and travel in, to, and from, the country.

Were these concerns to be addressed, the investment opportunities would be great, be they into the creation of additional hotels and other facilities, into activities to be enjoyed by the tourists, in fields of transportation, and much else.

There is also colossal investment opportunity in the sector of technical services provision to the diverse economic sectors, and the populace in general.

Because of the deplorable state of the economy, progressively intensified since 1997, millions of technologically skilled Zimbabweans have left for the diaspora, in order to generate a livelihood and funding to assist their impoverished dependants, resulting in an immense decline in the technological, skilled, service provision greatly needed in the economy.

And these are but some of the considerable investment opportunities that exist in Zimbabwe, and yet there is a calamitous absence of capitalisation on that, with a consequential intensification of unemployment, poverty, and innumerable other economic ills.

That it is so should be of major concern to the government, and all Zimbabweans, for it fails prima facie to be consistent with the magnitude of investor expectations for constructive and beneficial investment. Tragically, the reality is that would-be investors are recurrently discouraged from investing in Zimbabwe because of concerns on investment security.

The most pronounced cause of the potential investors’ concerns on investment security is the authoritarian and unjust, counterproductive manner of Zimbabwean pursuit of much-needed indigenisation and economic empowerment of the indigenous populace.

Very few are opposed to the principle of indigenisation, but government seeks to achieve it with callous disregard for investor concerns. Investors will not, as a general rule, be prepared to be reduced to minority status in the enterprises they invest in, and especially so when they are not assured of timeous and fair compensation for forced disinvestment.

The magnitude of potential investors’ concerns on investment security is intensified by confronational actions and statements of those in Zimbabwe’s political hierarchy.

The repeated verbal attacks on foreign investors in general, and foreign-owned companies, alienates not only the non-local investors in those enterprises, but also others who would otherwise contemplate Zimbabwe as an FDI destination.

Those attacks are intensified by recurrent threats of actions, of which one of the most recent has been the declared government intention to expropriate more than half of the lands with mining rights held by Zimplats.

These intentions are validly perceived as irrefutable continuance of the land expropriations commenced in 2000, devoid of compensation, in disregard of the consequential negative economic repercussions and the well-being of the displaced owners and their employees, and with intensively pronounced failure to comply with Bilateral Investment Promotion and Protection Agreements.

These triggers of serious investor security fears are exacerbated by all too frequent disregard for the fundamental internationally applied principles of respect for human and property rights.
The situation is worsened by unconducive taxation policies, repeatedly varied exchange controls, and other political dictates.

Until all these factors are convincingly and constructively addressed, the inflows of FDI will remain minimal, grievously impeding Zimbabwe’s much-needed substantive economic recovery.

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