John Kachembere 7 February 2018
HARARE – Zimbabwe has been ranked as one of the worst performing southern
African states in terms of its openness to foreign investment after the
country scored a lowly 18,7 points out of 100.
International think-tank BMI Research said other regional countries such
as South Africa, Zambia, Mozambique and Namibia scored relatively higher
at 60, 54,5, 50,7 and 41,3 points respectively.
This comes as years of relative economic isolation and political
uncertainty under former President Robert Mugabe have significantly
limited the overall amount of foreign direct investment (FDI) which the
country has received, despite the fact that Zimbabwe’s economy enjoyed
modest growth in FDI levels between 2011 and 2015 due to negotiated deals
with China and planned economic reforms.
Data from the United Nations Conference on Trade and Development (UNctad)
show that the country received an average of $400 million FDI in the past
nine years when other regional countries got an average of $1,1 billion.
BMI said excessive government levies and hostile business policies have
deterred much-needed investment, affecting the mining and agricultural
sectors in particular.
“Such policies have included the regular expropriation of land without
compensation, and the Indigenisation and Empowerment Act. Although applied
irregularly, this sets minimum ownership levels by black Zimbabweans at 51
percent of enterprises valued at more than $500 000 in most economic
sectors,” the Fitch Group company said, adding that labour regulations
also continue to restrict the employment of foreign nationals.
“The removal of Robert Mugabe as president in November 2017 does, however,
create potential upsides for renewed foreign investor interest in the
country and economic reforms,” the think-tank said.
The latest report comes after Zimbabwe was ranked 124th out of 137 on the
World Economic Forum’s 2017-2018 Global Competitive Index (GCI).
Roberto Crotti of the Geneva-based WEF Competitiveness Research said
Zimbabwe’s business environment has proved challenging to operate in for
local as well as foreign businesses, due to the country’s monetary and
fiscal standing which have affected overall macro-economic performance.
“For example, the budget deficit is now at 10 percent and the government
debt is 75 percent, which are affecting substantially the conditions for
businesses to operate in Zimbabwe right now,” he said.
The GCI ranking is determined by the performance of 12 pillars or drivers
of competitiveness that collectively define a country’s rating.
The 12 pillars are: institutions, infrastructure, macroeconomic
environment, health and primary education, higher education and training,
goods market efficiency, labour market efficiency, financial market
development, technological readiness, market size, business
sophistication, and innovation.
– The Financial Gazette