Liquidity hampers ZIA projects

Liquidity hampers ZIA projects
Published: 11 December 2013
THE majority of investment projects assessed by the Zimbabwe Investment Authority this year have taken off, although at a much slower pace largely due to prevailing liquidity challenges.

The projects were approved in 2011 and 2012. Last year, ZIA approved 172 projects worth $930 million.

This was down from 227 projects valued at $6,6 billion approved a year earlier. However, these were just approvals and most of the projects take time before being implemented.

Some projects take time before implemented for various reasons, including capital raising problems, but they remain in the pipeline. But others will never see the light of day due to various circumstances. Internationally, an implementation rate of at least 25 percent of approved projects is acceptable.

As part of its monitoring efforts, ZIA visited a total of 118 projects between January and November this year to assess the level of implementation and understand challenges facing investors.

Of the 118 projects that were visited during the period, 107 were found to be operational and 11 were yet to commence operations, ZIA chief executive Mr Richard Mbaiwa said.

The projects visited are in the agriculture, construction, manufacturing, mining, services, tourism and transport sectors.

"The majority of those that had not yet started operations were found to be at various stages of implementation with operations expected to commence soon," he said.

Major challenges cited by investors included stiff competition from imports. Mr Mbaiwa said high costs of local raw materials were forcing investors to import at a higher price. This translates to higher prices of the final goods, thereby making their products uncompetitive.

Delays in the processing of various permits were also cited as one of the major impediments. In addition, difficulties in obtaining work permits for technical employees is said to have affected operations of some firms especially given shortages of skilled labour locally.

High factory rentals and electricity bills as well as delays in getting power connections was also contributing to the slow implementation of the projects, Mr Mbaiwa said.

"As a result, companies are not able to export their products and therefore are losing out on a great chunk of the market share in the region.

"The authority seeks to intensify the visits to approved projects in the coming year, to establish the status of the investments on the ground."

ZIA generally gives investors two years to implement their projects, failure of which they should advise the authority on the reasons for the delay and their implementation plan.
- herald
Tags: Liquidity,


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