CONCERNS raised this week by investors on whether they will be allowed to repatriate their funds if they list on the Victoria Falls Stock Exchange (VFSE), speaks volumes of the confidence deficit in government that has indicated right and turned left far too often.
At a Zoom meeting held on Wednesday this week about the VFSE with Finance minister Mthuli Ncube, head of research of sub-Saharan Africa at the Russian-headquartered Renaissance Capital, Yvonne Mhango, voiced the fears and distrust among investors of doing business in Zimbabwe.
“We are an investment bank targeting frontier and emerging markets and our current clients include institutional investors who have invested in these frontier markets, Zimbabwe being one of them. So, we have clients that have invested in Zimbabwe and the main concern has been the lack of ease in terms of repatriating capital and dividends as well as of course significant changes in foreign currency policy that has discouraged foreign investors,” Mhango said.
Mhango’s sentiments illustrate the failure by President Emmerson Mnangagwa’s government to lure the much-needed foreign direct investment due to knee-jerk policies that characterised the tenure of his predecessor, the late former president Robert Mugabe.
Policy inconsistency, which was the hallmark of Mugabe’s disastrous rule for nearly four decades, has continued under Mnangagwa.
The introduction of the Zimbabwean dollar through Statutory Instrument (SI) 142 of 2019, as the sole legal tender without the necessary benchmarks, which led to the collapse of the local unit stoking inflation figures to fluctuate between 700 and 800%, is an example.
After the chaos of the spectacular fall of the local currency, Mnangagwa’s government has since changed its tune allowing the United States dollar it had barred for domestic transactions to trade with the local currency through SI 185 of 2020.
The abrupt suspension of the Zimbabwe Stock Exchange for more than a month on allegations of illicit activities has further damaged investor confidence.
This is evidenced by the bourse losing a massive ZW$42,5 billion (US$520,2 million) shortly after the suspension was lifted as investors abandoned the ZSE. The bizarre comments by Ncube that those affected by the suspension should treat the stoppage as a long holiday, clearly shows the lack of seriousness that has scared away investment.
The figures make for grim reading. Foreign direct investment (FDI) has plummeted from US$717,1 million in 2018 to just US$259 million last year.
The country’s FDI is projected to plunge further this year to just over US$150 million, which is no small part due to the chaos that emanates from the corridors of government.
Mnangagwa has spearheaded the setting up of the Zimbabwe Investment and Development Agency to boost investment.
However, such moves will be in vain if his government continues with policy inconsistency and confusion.