Investors court Zimbabwe

Published: 17 December 2017
FOREIGN investors have renewed their interest to commit funds into the country on the back of amendments to the Indigenisation and Economic Empowerment Act and the stance taken by the new administration on attracting investment.

This comes as foreign investors recently swarmed the Zimbabwe Investment Authority (ZIA) stand during the Africa 2017 Forum held in Egypt.

The Africa 2017 Forum, which ran from December 7 to 10, is a premier business platform to nurture new partnerships, meet investors and fast track business objectives on the continent, was organised by Egypt's Ministry of Investment and International Cooperation, and the Comesa Regional Investment Agency.

The endorsement of the country's new administration led by President Emmerson Mnangagwa, and the subsequent tweaking of the Indigenisation law, comes at a time when the country has approved investments worth US$1,5 billion from January to November 30 this year.

Although the approved projects are lower than the US$2,2 billion worth of investment projects approved in the same period last year due to the Hwange Thermal Power Station expansion deal worth US$1,4 billion, it is widely expected that the country is now poised to register more investment enquiries going forward.

ZIA chief executive officer Mr Richard Mbaiwa told The Sunday Mail Business in a wide-ranging interview last week that preliminary indications suggest that investors have changed their perception of Zimbabwe as an investment destination.

Mr Mbaiwa said although there have been no investment enquiries made which can be directly attributed to events that took place since November 14 when the Zimbabwe Defence Forces stepped in to arrest a potential economic implosion, investors he interacted with in Egypt and some on the phone, are excited about the new political and economic order.

"FDI is slightly different from the stock market or money market, which respond very quickly to the appointment or firing of a company's manager, but the interest is quite there from what we have seen.

". . . I was in Egypt attending the Africa 2017 Forum, which was basically a global forum organised by Comesa and the Egyptian government, and there was participation by investors from all over the world; there were many enquiries that were coming to us.

"I would say there was quite a lot of interest; and investors also expressing positivity, if I may put it that way.

"So, what I may say is that now there is a perception change by investors. Previously, when we attended such forums, we never got as many enquiries as we got this time around," said Mr Mbaiwa.

The Africa 2017 Forum coincided with the presentation of the 2018 National Budget Statement by Finance and Economic Planning Minister Patrick Chinamasa on December 7.

Minister Chinamasa announced that the 51/49 percent shareholding structure would now apply to the extractive sector – diamonds and platinum, while other sectors are now open.

The Indigenisation Act, which came into effect in March, 2010, was seen by foreign investors as an impediment to investment.

This resulted in fewer investors considering coming to Zimbabwe, opening opportunities for neighbouring countries such as Zambia and Mozambique, to receive large sums of investment enquiries.

While FDI plunged 30 percent to US$294,66 million compared to the year earlier, Zambia and Mozambique attracted FDI worth US$1,6 billion and US$3,7 billion respectively in 2015.

Mozambique and Zambia are credited for having a relatively friendly investment environment, which saw them being ranked 138 and 85, respectively, on the World Bank ease of doing business index 2018.

Zimbabwe recorded a marginal improvement, moving to 159 from 161 in the last report, despite the efforts that have been taken by Government to improve the investment climate.

But Mr Mbaiwa said while the doing business rankings matter from the perspective of addressing investor perception, Zimbabwe's focus is primarily to practically improve the ease of doing business on the ground.

He explained that political and legal adjustments that recently took place in the country will ensure that the rankings improve in the future.

Mr Mbaiwa said about 120 investors, "serious ones", who attended the Africa 2017 Forum, congratulated them for the "developments" happening in the country.

"It's exciting times . . . in that regard, it shows that there is positive sentiment from investors in terms of the new dispensation that we have," said Mr Mbaiwa.

ZIA plans to host a mega investment conference in the first quarter of next year as part of efforts to attract more investments, and explain some of the developments that have taken place in the country in terms of critical laws such as the Indigenisation Act and ease of doing business reforms.

Mr Mbaiwa said the pronouncement by Minister Chinamasa regards the Indigenisation Act clears all the confusion that had existed for a long time.

". . . this pronouncement was made when we were attending the investment forum in Egypt and some investors came to us and said this is a good development.

"To be honest, every time we attended an investment conference or we hosted a delegation, it was one of the issues that came up; whether these are investors from China, Europe or from anywhere in the world, they would always raise the issue of indigenisation in terms of trying to understand it or why they would be expected to have a partner with a shareholding percentage which is prescribed.

"Most investors actually want to engage local partners out of their own will, but I think the problem is prescribing a percentage to say, 'when you do this sector, the partner must have 51 percent'. I think that is what did not go down well with most investors.

"So I think the announcement has really excited a lot of our potential investors and we also hope it will bring more traffic in terms of investments," said Mr Mbaiwa.

The amendments made by Minister Chinamasa are expected to become law as they will be part of the Finance Act.

Once the amendments become law, all anxieties that have gripped investors in the past will be put rest.

President Mnangagwa has indicated that his economic turnaround programme will be anchored on agriculture and attracting FDI to tackle high levels of unemployment.
- online
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