Thomas Mutswiti/ Itai Mushekwe
GOVERNMENT’S command approach to the economy has tainted its investment promotion initiative which has seen Foreign Direct Investments (FDI) dwindling to i
ts lowest ebb since 2000 during the chaotic land seizures.
President Robert Mugabe’s call for 2005 as a year of investment is proving to be pie in the sky.
Despite the increase in Zimbabwe dollar terms in FDI levels, the country remains in dire need of foreign capital injection amid calls for an improvement in the investment climate.
Statistics indicate that levels of FDI have been increasing with the US showing substantial interest in the tourism sector. It has invested $4,9 trillion in the sector with China investing $620 billion in the agricultural sector for the half year to July. Total foreign and joint venture investment increased from $1,4 billion in 2000 to $5,8 trillion as at July 31.
However, analystswho spoke to businessdigest doubted these figures indicating that FDI has been falling due to a host of political and economic problems in the country. Many spoke of the failure of investment initiatives due to policy uncertainties.
Economist Eric Bloch said: “My perception of Zimbabwe’s investment promotion initiative is that it is all talk and no substance and, therefore, of very minimal effect. As yet 2005, which is supposed to be the year of investment, has witnessed very little investment. There have been some specific investment projects agreed with China, but most have yet to convert to reality.”
Bloch added that it was not correct that the economy has endured massive capital flight, for the stringent exchange controls have prevented repatriation of capital by foreign investors. The only major capital flight has been externalisation of assets through the parallel market. This has compounded the scarcity of foreign exchange and exchange rate movement in the unofficial markets. Investors do not invest if there is a lack of national credibility