via Zim investment: German seeks assurance – DailyNews Live 19 MAY 2014
Zimbabwe must amend its laws to incorporate recent changes in the implementation of its indigenisation policy, Germany says.
The southern African country’s empowerment law compels foreigners to give up 51 percent shareholding to locals.
But recently, President Robert Mugabe ruled out a one-size-fits-all indigenisation approach, saying only companies utilising the country’s natural resources will be required to immediately give up majority stakes to indigenous Zimbabweans.
Ulrich Klockner, German ambassador to Zimbabwe, said investors from his nation are still sceptical of the piece of the empowerment legislation.
“We are very excited about the new clarifications that are coming up, but we feel the government of Zimbabwe should at least put these into writing for reference,” he said.
“German investment is not what it was before and it’s a shame many companies have set shop in Johannesburg as it seems a safer investment destination,” Klockner said, adding that “once government clears this obstacle I am sure investors will flock into the country”.
He said at the moment, Zimbabwe is “not attractive as an investment destination” and “investors feel government will grab assets from them”.
“Once government puts its house in order the situation will definitely improve,” said Klockner.
Eric Bloch, an economist, said government has only made statements and promises, but has not moved to amend the laws.
“The law was an obvious infringement on property rights. If government is serious about these utterances, I say they move quickly to boost investor confidence and just put all this in writing,” he told Business Live.
This comes as Australia has also said investing in Zimbabwe is extremely risky, likening the move to swimming in the dangerous crocodile-infested Zambezi River.
Matthew Neuhaus, the country’s ambassador to Zimbabwe, told a Sapes Trust conference recently that the African nation has a long way to go in attracting foreign direct investment (FDI).
“Investing in Zimbabwe is like swimming in the Zambezi between crocodiles and hippos,” he said, adding that “instead of policies to encourage FDI, you have chosen indigenisation especially in the mining sector”.
He said Australian investors have found it easier to do business in
Zambia and Mozambique, injecting billions of dollars in investment in the economies.
“Because of the uncertain political and economic environment, investors have skirted this country,” said Neuhaus.
“Certainly, indigenisation laws have been confusing, and the implication of the 51 percent ownership does not inspire confidence in investors. They want to know that their investments are safe and that they get what they put in,” he said.
Early this month, Finance minister Patrick Chinamasa reassured investors that Zimbabwe is a safe investment destination, if they comply with the country’s laws.
This comes as foreign investors have been skirting the investment-starved country, labelling its policies hostile, particularly the empowerment law.
Chinamasa said government plans to put in place “a flexible policy framework that attracts investment while at the same time ensuring that the people of Zimbabwe also benefit”.
He said the Zimbabwe Investment Authority will have full authority to determine investment conditions and approve foreign direct investment.
“This is why we have clarified the policy on indigenisation and declared our invitation to FDI. However, government’s efforts and commitments towards re-engagement need to be reciprocated by the same efforts from the global community,” he added.