THE 2013 plunge in investment approvals is indicative of government’s sterile efforts to address various obstacles stifling foreign direct investments, analysts have said.
The Zimbabwe Investment Authority (Zia) approved investment projects worth US$685,9 million for the full year ended December 2013 compared with US$929,9 million recorded in 2012 with the country continuing to underperform as a foreign investment destination.
According to the latest statistics from Zia, 163 projects were approved as compared to 172 in 2012 while creating employment for 8 723 people, down from 9 469 in 2012.
Of the approved foreign investment, according to country and sector, China contributed investment worth US$389,5 million in all sectors which include agriculture, construction, manufacturing, mining, services and tourism.
This is followed by little known island Curacao with US$63,6 million mainly in the manufacturing sector; Russia with US$40,1 million; South Africa with US$38,9 million and the United Kingdom with US$34,6 million during the period under review.
The remainder was shared among other countries including Australia, Belgium, Botswana, British Virgin Islands, Croatia, Eritrea, France, Ghana, India, Israeli, Korea, Lebanon, Malawi, Mauritius, Mozambique, Nigeria, Pakistani, Serbia, Singapore, Spain, Seychelles, Tanzania, United Arab Emirates, United States of America and Zambia.
The country ranks a lowly 170th on the Ease of Doing Business index, a damning indictment on the country’s ability to attract investment.
MDC-T shadow industry and commerce minister Tapiwa Mashakada was actively involved in setting up a one–stop shop investment centre to ease the tedious procedures investors go through, in his portfolio of Economic Planning minister during the tenure of the inclusive government.
He believes the momentum created by establishing this centre has been stifled since the end of the inclusive government’s lifespan and the contentious Zanu PF victory in elections last year.
“I think there is no evidence to suggest that the government is carrying forward investment promotion efforts,” Mashakada said.
“There is a lull in investment promotion activities in the country.”
He said the failure by the current government to concretise efforts to fully establish the one-stop-shop could explain the dip in investment approvals.
“The one-stop shop has not yet been fully consummated into a fully-fledged functional entity. This is because of the lackadaisical attitudes of other government departments which must constitute the one-stop shop. This makes it difficult for investors as they are forced to run from pillar to post in search of licences,” Mashakada said.
He added that the indigenisation policy was “the elephant in the living room” as no investor would want to come into the country and lose controlling interest in their businesses.
Mashakada also pointed out that there was no conscious effort by the current government “to drum up foreign direct investment”.
Economist John Robertson said the reduction in investment approvals points to the unfavourable investment climate which includes inadequate electricity and water supply.
He also warned that the amount approved by Zia did not equate to actual investment being injected into the country’s economy.
“The amount approved by the investment centre is not exactly the investment that has come,” Robertson said. “It does not necessarily mean a single investor has come.”
He said investors tend to get investment approvals from several countries including Zimbabwe and make a choice where to invest leaving the country at a disadvantage.
Robertson warned that unless the investment climate improves, and is complemented by improved electricity and water supplies as well as rehabilitation of crucial infrastructure such as the railway network, there would not be much investment.
Economist Godfrey Kanyenze said investors have adopted a wait-and-see approach before they come in to do business in the country.
He said investors were waiting for a “broad signal” from government in terms of implementing relevant policy reforms. Investors were waiting to see if policies would be implemented consistently without contradictions.
“Government’s adoption of the International Monetary Fund’s staff monitored programme to retire the country’s debt was a critical marker,” Kanyeze said.
“Addressing issues such as the perennial shortage of water and electricity and infrastructure rehabilitation would also be vital in bringing much needed investment,” he added.
Economist Godfrey Kanyenze said investors have adopted a wait- and-see attitude before they come in to do business in the country.He said investors were waiting for a “broad signal” from government in terms of implementing relevant policy reforms.Kanyeze said investors were waiting to see if policies would be implemented consistently without contradictions.