ZIMBABWE’s failure to implement far-reaching economic reforms, coupled with policies that inhibit foreign-owned firms from repatriating their profits, is scaring away European investors, resulting in the country attracting very little investment from that part of the world.
In an interview with the Zimbabwe Independent yesterday, European Union (EU) head of delegation Timmo Olkkonen said investors have cited the government’s policy inconsistencies and currency volatility as major hurdles for those interested in investing in Zimbabwe.
He said most European investors are sitting on the fence in the hope that government will implement the much-needed reforms. “Of late, there have been less contacts to our office from European investors. I don’t think it’s a positive sign. They want to have transparency, they want to have a level playing field and they want to have security of tenure,” Olkkonen said.
The EU has been in the forefront calling for the expeditious implementation of economic and political reforms that are widely seen vital for attracting foreign direct investment. There was renewed hope for investment when President Emmerson Mnangagwa took over from the late former president Robert Mugabe in a military coup in 2017, but investor fatigue has crept in as foreign businesses find it difficult to operate in Zimbabwe.
While Mnangagwa’s “Zimbabwe is Open for Business” mantra was a sign of renewed hope for foreign businesses, government has failed to walk the talk on reforms.
Government has over the past two years has not honoured foreign payments with several foreign-owned listed firms failing to repatriate profits. This has eroded investor confidence as the local currency continued to plummet in value. “More recent complaints have been the expatriation of profits, the issues with currency which are also pertinent to investors. They will not be here for charity but to make profit,” Olkkonen said.
European investors have in the past complained about the country’s exchange control measures where the Reserve Bank of Zimbabwe (RBZ) retains a percentage of export earnings. Investors also feel their hard-earned cash is not safe in the country’s banks as the RBZ has in the past been accused of illegally raiding accounts.
Olkkonen urged government to stop blaming sanctions for the low levels of investment. “Whereas these allegations that the restrictive measures would be a deterrent, that’s not the story I am hearing from would-be investors,” Olkkonen added.
“They are looking at the economic climate but the governance environment around it such as security of tenure is obviously an important part of it.”
The head of the EU delegation, who has been criticised by government and Zanu PF activists over his hardline stance on reforms, urged the government to up the ante on political reforms. Of concern to European countries is the implementation of the 2018 post-electoral reports and recommendations from the Kgalema Motlanthe commission of inquiry into the August 1, 2018 killings where six civilians were shot dead by security forces in central Harare.
The situation was compounded by the killing of 17 people during the state’s brutal crackdown on protesters during mass street protests in January last year which received global condemnation.
“A year has now passed since the Motlanthe commission report and we would hope that momentum would pick up on following up on those recommendations. On the electoral reforms, before we know it, 2023 will be here and many of these reforms will take time so we would hope that there will be a follow-up to the EU observation report and other observations made and indeed the momentum would pick up,” Olkkonen said.
Although relations between Harare and Brussels soured at the turn of the millennium following Mugabe’s chaotic land reform programme which dispossessed many several European farmers, the bloc has since 2017 expressed willingness to engage with Zimbabwe. In March last year, Zimbabwe and the European Union resumed political dialogue under Article 8 of the Cotonou Agreement between the bloc, African, Caribbean and Pacific countries.
The two parties have already convened two meetings, with dialogue having been escalated to ministerial level.During the last meeting in October last year, they took the government to task over the slow pace of political reforms and the country’s deplorable human rights record following a series of incidents where state security agents have used brute force to crush dissent and harass human rights defenders and opposition members.
“From what we judge from our political dialogue, there were commitments made on reforms and we are hopeful that this is the case,” Olkkonen said.