John Kachembere 12 June 2017
HARARE – Zimbabwe attracted $319 million in foreign direct investment
(FDI) last year compared to $421 million in 2015, the World Investment
Report has shown.
The annual report, compiled by the United Nations Conference on Trade and
Development (Unctad), southern African country’s FDI has been on a
sustained decline for the past five years.
Foreign investment inflows into Zimbabwe stood at $387 million in 2011
stagnated at $400 in 2012 and 2013 and then reached an all-time high of
$545 million in 2014 before declining to $421 million and $319 million in
2015 and 2016 respectively.
The latest figure compares unfavourably with the country’s neighbours such
as Mozambique, South Africa and Zambia which registered $3 billion, $2,3
billion and $469 million FDI inflows respectively.
Lack of policy consistency, indigenisation law, disregard for property
rights and the unwillingness of authorities to deal with corruption have
often being identified as factors dissuading investors from a country
which boasts of vast mineral deposits.
Global residential and commercial property consultancy firm, Knight Frank,
said the continued decline of the Zimbabwean economy has led to several
manufacturing companies closing operations.
“Very little foreign direct investment has come into the country as a
result of the government’s indigenisation policies, the high cost of
capital and socio-political instability,” Knight Frank said in its 2017
“This has led to an oversupply and under-utilisation of industrial space.
The sector is therefore characterised by high vacancy rates, declining
rents and the voluntary surrender of leased space by tenants,” the
property consultancy firm said.
The report added that a number of investors in this sector were looking to
disinvest, but there was little or no demand except from a few
Knight Frank noted that Zimbabwe’s continued low economic activity with
the current liquidity challenges have stagnated uptake of industrial space
and office market activity.
Despite the implementation of several import restrictions, namely,
Statutory Instrument 6 and 126 of 2014, SI 18, 19, 20 and 64 of 2016 only
10 percent of manufacturers were able to fully capacitate.
In terms of office space, buildings in Harare’s central business district
(CBD) now have void rates of between 50 percent and 90 percent, which is
warding off investments.
“Suburban offices have become more sought-after investments, due to their
lower void rates, but there continue to be few sales transactions,” the
While critics assert that Zimbabwe’s indigenisation drive is leading to a
drying up of investment, economist Gift Mugano said the country should
come up with orthodox policy measures aimed at attracting FDI.
“Rather than proposing narrowly defined FDI policies, it is argued that
effective investment incentive packages should be seen as part of the
country’s overall industrial policy, and be available on equal terms to
all investors, foreign as well as local,” he said.
The academic noted that incentives should focus in particular on those
activities that create the strongest potential for spill overs, including
linkages between foreign and local firms, education, training, and
research and development.
“It should also be noted that the country’s industrial policies in general
are important determinants of FDI inflows and effects of FDI,” Mugano
“By enhancing the local supply of human capital and modern infrastructure
and by improving other fundamentals for economic growth, a country does
not only become a more attractive site for multinational firms, but there
is increased likelihood that its private sector benefits from the foreign
participation through spill over benefits,” he added.