Sunday Mail Reporter
At least 126 investments worth more than US$3 billion have been licensed by the Zimbabwe Investment and Development Agency (ZIDA) since February last year, as authorities continue to deepen investor-friendly reforms.
A stable macroeconomic environment characterised by exchange rate stability and declining inflation has resulted in growing interest from investors.
Most of the investors are from China, India, Mauritius, South Africa and Russia, and are angling for sectors such as mining, manufacturing, agriculture and transport.
There was also increased interest in engineering services, construction, including manufacturing and importation of mining, water and tyre equipment.
According to ZIDA, the appetite for investment in sectors such as manufacturing was largely due to implementation of the National Development Strategy 1 (NDS1).
“From February 2020, a total of 126 licences have been issued; investment commitments valued at US$3 589 765 554 were made during the period under review,” said ZIDA in responses to questions from The Sunday Mail.
“The majority of the projects are located in Harare, particularly projects in the manufacturing and service sectors.
“The majority of mining projects are targeting the Midlands, Mashonaland West, Mashonaland Central, Matabeleland North and Matabeleland South.
“The Agency has received a number of applications from various source markets including China, India, Mauritius, South Africa and Russia.
“Stability in the exchange rate and declining inflation rate point to an improving investment climate.
“ZIDA will continue to engage with other Government departments and agencies on how to improve the ease of doing business.”
The agriculture sector (37 percent) had the highest number of approved projects, followed by the services sector (27 percent), mining (20 percent), transport (9 percent), energy (2 percent) and manufacturing (1 percent).
The introduction of the foreign currency auction system by the Reserve Bank of Zimbabwe on June 23 last year has managed to stabilise the exchange rate and prices.
Inflation has been progressively declining from a post-dollarisation high of 837 percent in July 2020 to 162 by May 2021.
Annual inflation is further projected to decline to 55 percent by end of this month and drop below 25 percent by year-end.
“As the economic environment continues to improve, it is anticipated that FDI (Foreign Direct Investment) inflows will increase on the backdrop of a stable and growing economy.
“General investments into the country have shown some very encouraging signs of an economy on the mend and thus positive to achieving the National Development Strategy1.
“Some noteworthy themes have been: The increase in capital equipment importation, thus implying increasing productivity across different sectors, but mainly in mining and manufacturing.
“An uptick in the services sector has also been noted.
“Most notable investments have been in underpenetrated sub-sectors like warehousing solutions and logistics, engineering services, and private equity funds.
“The most encouraging has been the increase in manufacturing licensees as it aids some key objectives of NDS 1 – import substitution, job creation, skills transfer, etcetera.”
ZIDA said some notable new investments over the review period include manufacturing of lubricants, construction and mining equipment, PPE (personal protective equipment), water infrastructure equipment and tyre manufacturing/retreading.
“As the economic environment continues to improve, it is anticipated that FDI inflows will increase on the backdrop of a stable and growing economy.”
A monitoring exercise to measure progress of the approved projects is currently underway.
According to ZIDA, all designated Special Economic Zones are at the development stage.
“We are in the process of conducting a monitoring and evaluation exercise to ascertain which of the licensed investors is operational.”
ZIDA was officially launched this year by President Mnangagwa, raising hopes that the country will now go a step further in attracting both local and foreign direct investment.
In his State of the Nation address last month, the President said reforms instituted by Government have seen the country becoming an attractive location for business.
“Zimbabwe has risen an incredible 21 places on the Ease of Doing Business rankings over the past three years and 31 places over the past five years,” he said.
“Our progress is getting noticed and as we creep towards the end of this global pandemic, Zimbabwe, through various rigorous reforms, is well placed to be an attractive location for business and a gateway to economic activity in Southern Africa, though we still have much more work to do.”