ZIMBABWE’S deepening economic crisis is partly as a result of dwindling investment inflows due to the hostile business environment characterised by policy inconsistencies and uncertainty. This week Zimbabwe Independent reporter Hazel Ndebele (HN) spoke to Zimbabwe Investment Authority (ZIA) chief executive Richard Mbaiwa (RM) on various investment-related issues, which include falling in foreign direct investment, the impact of the liquidity crunch on business and the progress made on the one-stop-shop concept.
HN: Are you concerned about the dwindling levels of Foreign Direct Investment (FDI) from US$545 million in 2014 to US$319 million last year?
RM: As an investment promotion agency, it is our desire to see an increase in all forms of investment in the country as we think that the country offers a lot of investment opportunities across all sectors that are still to be realised. We will therefore endeavour to step up our investment attraction efforts so as to increase the levels of both domestic investment and FDI inflows. However these figures are taken from the United Nations Conference on Trade And Development(Unctad) World Investment Report and do not include the local component of the projects that are being implemented in Zimbabwe. The country has taken a deliberate and strategic position where we encourage joint ventures between foreign and domestic investors, so there is a significant portion of investment which is not captured by Unctad.
HN: What can be done to improve FDI inflows?
RM: We need to position the country as a highly attractive destination for investment and this is mainly to do with changing investor perceptions and the country’s image. On-going work to improve the ease of doing business in the country precisely aims to achieve that. Improving the ease of doing business rankings will go a long way to change investor perceptions and these reforms should continue to be pursued with a view to streamlining procedures at both national and local government levels.
HN: How in your view has the liquidity crunch impacted on investment prospects?
RM: The liquidity crunch affects effective demand for goods and services in the economy. However, I would say that most of the economic agencies have now embraced the use of plastic money and non-cash transactions. For our domestic investors, whom we expect to partner with foreign investors, it is important that they get easy access to capital. For foreign investors, the major concern is related to ease of remitting dividends and other foreign payments such as critical imports and loan repayments.
HN: How has the scourge of corruption hampered your efforts to bring in much needed investment?
RM: Corruption or perceived corruption, at any level, has a negative impact on attracting investment, whether foreign or local as it adds another layer of costs associated with doing business. It should therefore be condemned in the strongest terms and at ZIA we have zero tolerance for corruption and we urge all stakeholders, including investors to report any instance of corruption immediately to the appropriate authorities.
HN: Since January this year ZIA has approved projects worth US$920 million which are more valuable when comparing to projects approved during the same period last year worth US$451 million. What is your view on this?
RM: We believe that it is a positive sign that we are seeing higher value projects as this means that the projects are more serious and would have a higher economic impact in terms of indicators like job creation, generation of exports and supply linkages with other sectors, especially the SMEs, which will in turn bring more benefits to Zimbabweans in line with the aspirations of ZimAsset.
HN: Which sector has had the most approved investment so far this year?
RM: Since January the sector with the highest number of approved projects has been the mining sector which has had 38 projects valued at US$467 million. The manufacturing sector has the second highest approved projects with 28 projects worth US$63 million, up from projects valued at US$25 million last year. Other sectors are also growing significantly for instance we have also seen growth in the services sector. We also have investments in the agriculture, construction, transport, tourism and energy sectors.
HN: From past experiences do you think the projects approved by ZIA in different sectors of the economy will be implemented?
RM: Of course, we expect that these projects will be implemented; otherwise we would not approve them. When these investors submit their project proposals they definitely have serious intentions and they would not go out of their way to incur costs related to submission of proposals if they were not serious. However, some projects may face challenges along the way and may not end up seeing the light of day for various reasons. I must also caution that we should not expect these approved projects to be consummated overnight, which is why we give a two-year window from time of approval to allow the investors to put everything together. Of course, depending on complexity, some projects can be implemented in a relatively short timeframe.
HN: What progress has been made since the launch of the one-stop-shop concept?
RM: The one-stop-shop is currently operational as a physical entity, but we want to progress towards a virtual or digital one stop shop where government agencies will be linked up electronically. In this regard we have already developed a combined on-line application form, which will enable investors to submit their applications on-line to the respective government agencies
HN: How beneficial do you think the Special Economic Zones (SEZs) are going to be to investment?
RM: As you may be aware, the SEZs provide an array of incentives, both fiscal and non-fiscal, that qualifying investors will be able to enjoy, thus making the country more attractive as a destination for investment.
HN: Has the Look East Policy spurred investment in Zimbabwe?
RM: If you look at our investment statistics, you will see that countries like China and India are key investment source markets across all sectors of our economy. This shows that the Look East policy has indeed borne fruit. However, I wish to state that we welcome any legitimate investment from all corners of the world and we desire to see more investment coming from the non-traditional source markets such as the emerging economies and the former Eastern European countries.
HN: Consultations for the 2018 budget have started, what in your view should the Finance minister include in his budget statement to promote investment.
RM: We are still undertaking consultations to prepare our input into the national budget, which will be submitted to the minister at the appropriate time for his consideration.