This comes against the backdrop of claims by President
Emmerson Mnangagwa’s administration that the country had attracted a staggering
US$12 billion in FDI, mostly through various “mega-deals” signed during the
year.
Announcing his maiden budget statement for 2019 last week,
Finance minister Mthuli Ncube said a harsh investment climate — characterised
by erratic power supplies, redundant firms requiring massive investment
capital, rigid licensing requirements and a shambolic liquidity situation — was
discouraging investors.
The southern African nation is ranked 155 out of 199
economies on the 2018 World Bank (WB) Ease of Doing Business index.
“In 2018, FDI is projected at only US$470 million against
FDI inflows of about US$2,3 billion and US$1,1 billion received by our counterparts
in the region — Mozambique and Zambia in 2017,” Ncube said.
“Identified major weaknesses are in the areas of: getting
electricity, resolving insolvency and time taken and cost to import and export
goods.”
However, inspite of the paltry FDI inflows Zimbabwe
attracted in 2018, Mnangagwa, who won this year’s disputed poll, has announced
several murky multi-billion dollar investment deals under the mantra: “Zimbabwe
is open for business”.
Ahead of the July 30 elections, Mnangagwa promised to
transform Zimbabwe into a friendly investment destination, as part of a
departure from former president Robert Mugabe’s policies.
Mugabe’s hostile policies, particularly the violent land
reform programme and the indigenisation policy, coupled with his abrasive
relationship with the West turned Zimbabwe into a pariah state.
Since assuming power through a millitary coup in November
last year, Mnangagwa’s administration has announced that it has secured huge
investment deals although actual capital inflows remain at a minimum.
Last week, Mnangagwa announced that his government had
managed to secure US$5,2 billion from China Power and General Electric to build
a 2 800-megawatt (MW) hydro-power generation station at Batoka Gorge, in the
Zambezi Valley.
Earlier this month, Mnangagwa also addressed a press
conference announcing that Australian-listed Invictus would initially invest
US$20 million to explore for oil reserves around the Muzarabani area, with the
figure expected to increase to hundreds of millions of dollars depending on the
availability of the resource.
In April, Mnangagwa parcelled vast platinum claims to his
associate Lucas Pourolis through his Karo Resources investment vehicle to set
up a refinery plant estimated at US$4,2 billion with potential to create over
100 000 jobs.
However, Bobby Morse, a senior partner at Tharisa Plc — a
sister company of Karo Resources — disowned the US$4,2 billion figure in an
interview with the Zimbabwe Independent, suggesting the investment amount was
plucked from thin air by government.
In June, Mnangagwa’s administration also announced another
controversial US$5,2 billion project with murky South African outfit Nkosikhona
Holdings to transform coal into fuel in the Zambezi Basin.
This year, government also signed an agricultural deal with
the Financial and Commodities Ecosystem (FinComEco) to the tune of US$1,5
billion, touted to directly create 630 000 jobs.
Economist Tinashe Kaduwo said the persisting currency
volatility crisis, arising from the value disparities between the United States
dollar and the local bond currency, was frustrating investors from repatriating
profits to shareholders strewn around the globe.
He contended that Zimbabwe’s “political arena”, struggling
to break away from Mugabe’s toxic policies, continued to jinx the southern
African country’s efforts to mobilise investment capital.
“Capital always goes where it can be withdrawn without
restrictions and challenges. Delta, for example, has been struggling to remit
dividends to its foreign shareholders due to foreign currency payments
gridlocks.
“The political arena is also to be blamed. This is to some
extent the economic cost of a disputed election. Investors will wait till the
climate becomes certain,” Kaduwo said.
Over the past six years, Zimbabwe has attracted foreign
investment averaging below US$1 billion annually, while Mozambique’s investment
inflows peaked to over US$6 billion in 2013, before declining to US$2,3 billion
in 2017.
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