HomeCommentLet us discard failed policies

Let us discard failed policies

Two recent reports have confirmed the parlous state of Zimbabwe’s economy, showing that there is very little fresh capital flowing into the country.

Comment: Zimbabwe Independent Editor

There is a marked decline in foreign direct investment inflows into Zimbabwe, coupled with a significant decrease in remittances. This state of affairs is symptomatic of the government’s catastrophic failure to take decisive action against the economic malaise. The World Investment Report, citing statistics from the United Nations Conference on Trade and Development (Unctad), shows that Zimbabwe attracted US$319 million in FDI last year, compared to US$421 million in 2015. These are UN numbers; no government official can flippantly dismiss their veracity or thoughtlessly attribute them to the machinations of “imperialist enemies”.

The figures confirm that Zimbabwe’s investment inflows have been on a downward trend in the past five years. FDI stood at US$387 million in 2011, US$400 million in 2012 and 2013, peaking at US$545 million in 2014 before plunging to US$421 million in 2015 and US$319 million last year.

In terms of diaspora remittances, Zimbabwe received US$180 million during the first quarter of, compared to US$193 million in the corresponding period in 2016, according to the latest Treasury bulletin. Treasury is projecting the remittances to reach US$1,2 billion by the end of 2017.

Last year, the diaspora remittances stood at US$779 million, down from US$939 million in 2015. The pattern is clear: diaspora remittances are waning. But considering that the country receives more from remittances than FDI, one would expect the government to treat foreign-based Zimbabweans with respect. Instead, what do we see? The diaspora is denied the vote and some top officials are in the habit of making disparaging remarks against these hard-working citizens who are toiling day and night to fend for their families.

The authorities are partly attributing the decline in diaspora remittances to “the sluggish performance of the global economy, as well as errors and omission arising from conduct of remittances through informal channels”.

Looking at Zimbabwe’s neighbouring countries, the FDI trends in recent years point to a surge in capital investment, primarily driven by capital-intensive projects in such sectors as real estate, hospitality, construction, transport and logistics.

The real estate sector in this country is grappling with powerful headwinds which threaten to decimate business.
When was the last time we witnessed a new construction project of significance in central Harare or Bulawayo? Void rates and rental defaults for existing buildings are frighteningly high. Transport and logistics are also under pressure as the economy continues shrinking.

The major impediments to attracting foreign investment are policy inconsistency, political risk, corruption, inefficient government bureaucracy, and poor access to financing. Outdated trade and investment policies have been a big problem as well. This is particularly the case in mining, where archaic practices by the state are sabotaging the massive potential of the country’s mineral endowment.

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