ZIMBABWE’S treasury sees foreign direct investment inflows growing by a modest 3,8% to US$614 million next year after government tones down its rhetoric on the indigenisation and empowerment policy compelling foreign investors to cede majority stakes to black Zimbabweans, a pre-budget paper has shown.
According to the 2016 budget strategy paper, ongoing reforms to improve the country’s investment climate could spur growth of greenfield projects as the country continues to face chronic liquidity constraints.
Zimbabwe’s FDIs, according to the latest United Nations world investment report, leapt to US$545 million in 2014 – less than 5% of the country’s GDP — from US$400 million in the previous year, driven by interest in mining, infrastructure and services but still lags regional rivals.
“Policy clarity and consistency are integral in promoting FDI. In 2016, FDI is projected to increase to US$614 from US$591 million in 2015, benefiting from the policy clarifications by Government as well as the reengagement process with the creditors,” reads the budget strategy paper.
“However, FDI inflows into the country remain far too low relative to the investments requirements for ZimAsset programmes and levels flowing into other regional counterparts. As we strive to catch up on attracting FDI, more attention will be paid to addressing the ease and cost of doing business, concluding outstanding BIPPAs as well as removing infrastructure bottlenecks, among other priorities.”
Government has made an economic growth projection of 2,7% next year from 1,5% this year despite weakening commodity prices on the international market and a looming drought.
“Despite the prolonged impact of declining international prices, mining continues to hold much potential for the recovery of our economy. In 2015, the sector exhibited moderate growth primarily driven by output increases of gold, nickel, platinum, coal, among other minerals,” the paper reads.
“The slowdown in economic activity is also being reflected through underperformance in revenues. Cumulative revenue collections for the period January to August 2015 amounted to US$2,29 billion, against a target of US$2,5 billion. For the rest of 2015, revenues are projected at US$3,69 billion against the original Budget US$3,9 billion.”-Bernard Mpofu