via ‘Address investors jitters’ – NewsDay Zimbabwe. 19 June 2014
Business, General Business
POLICYMAKERS should address investors’ jitters relating to policy inconsistency and clarity, a leading research firm has said as foreign direct investment (FDI)continues giving Zimbabwe a wide berth.
CHIEF BUSINESS REPORTER
In a latest research note, MMC Capital said the allocation to Zimbabwe of sub-Saharan Africa FDI remained very low.
According latest data from the World Bank, of the $ 31,9 billion FDI that came to sub-Saharan Africa, Zimbabwe’s share was a paltry 1,5%.
“Our view is that there is an urgent need for policymakers to address investors’ jitters relating to policy inconsistency and clarity in a bid to attract FDI,” MMC said.
“Treasury recently hinted that it is in the process of reviewing the regulative legislation such as the Securities Act, as well as synchronising investor policies in a move to restore investor confidence in Zimbabwe.”
MMC said FDI not only added to investable resources and capital formation, but was also a means of transferring production technology, skills, innovative capacity, organisational and managerial practices between locations, as well as of accessing international marketing networks.
MMC said Zimbabwe had to turn to FDI as organic growth was proving to be a mammoth task considering the low rate of savings.
It said FDI has become an important source of private external finance for developing countries as compared to portfolio investments.
“It is different from other major types of external private capital flows in that it is motivated largely by the investors’ long-term prospects for making profits in production activities that they directly control,” MMC said.
Zimbabwe is in desperate need of FDI to help rebuild the economy devastated by a decade of contraction.
Estimates say the country needs in excess of $16 billion for infrastructure. The money is not available locally as revenue from taxes is around $4 billion. The country cannot access lines of credit from multilateral financial institutions beset by the over$6 billion external debt.
COMMENTS
I copy and paste my submission to my comment elsewhere on your site:
Zimbabwe is now rated in the same category with North Korea, Venezuela, Cuba,Boliva Burma and many others in the investment circles. In fact it sits on number 172 in most ratings.
Why?
-Political Instabilty and too much power in one group
-Corruption
-No law and order with the judiciary compromised
-Inconsistent Policies..Price Controls/Indigenisation/Land acquisition/Nationalisation etc a new policy every election.
-Long term planning impossible because of the aged Country leader.
-Property Rights not guaranteed
-High level of hurdles of doing Business in Zimbabwe
-No easy recourse to justice
-Unfavourable competition with informal sector
Even if Mugabe goes to USA and kneels down and say “come we will protect your investment”….no one will ever trust a crocodile, including many black Zimbabweans who have moved their investment and skills to other countries.
The issue is about “trust”, it is a critical commodity for any meaningful investement, with Zimbabwe getting less than 1 percent FDI destined for Africa.
Unfortunately the people surrounding Mugabe are also not trustworthy, as they wait to take over from him.
Note the Zimbabwe Economic saga has been going on for 16 years and projection it will go on for another 7-10years, provided Mugabe steps down or dies immediately. After the exit of a dictator things will take another 5-10 years to normalise.
Tsvangirai, despite his obvious shortfalls indeed holds a critical key to attract investment and economic stability, as evidenced in the period post 2008 to 2011.
If he comes in and having proper power to some extend he will bring to a great extend international goodwill and trust and it dilutes Zanu absolute power, which no investor is willing to risk based on past history.
Wish this article was not only descriptive on the problem but meticulously prescriptive on how to make the suggested trajectory feasible.I once did a Salesmanship course.As a Salesman,how do you sell a Zanu pf brand,demonstrate and convince investors partly on the security issue of their investments.Zanu is known for changing colour like a chameleon,to match the topography in their favour,freewheelingly at any given moment.Sound but how?
The time has long gone to address investor jitters, when one sets up a pattern of dishonesty that is consistently added to by lies from government ministers the only path is to resign. Which is what the zimbabwe govt will have to do to restore any faith to investors. Then there is the long road to restore infrastructure to acceptable levels to compete with countries who have not raped and pillaged their resources and who have invested heavily in education and so have a skilled efficient and viable workforce to offer investors. Zimbabwe has done nothing for 34 years except back track and abuse the great country Rhodesia was. another concept that zimbabweans will have to embrace is one that people have to work hard productively to be competitive. I doubt the anyone left in zimbabwe has the right work ethics. Those that did have have immigrated a long time ago.So in the short term Zimbabwe is a failed state, it doesnt have any credability and its government if a total failure. The people of zimbabwe will need to accept that it will take them and their children another 10 to 15 years of hard work without a lot of reward to get back to being prosperous. The quick fix of looting what remained of Rhodesia doesnt work and the only road in the future is going to be hard work and honestly.
You are talking to deaf ears and selfish thieves and looters. They do not care about Zimbabwe’s economy. If ZPF did we would have been seeing the fruit of that a while back.