HARARE — Zimbabwe’s approved investment projects are expected to reach $1 billion in 2014 after nearly surpassing last year’s figures within the first five months, driven by interest in mining and signs government might relax its indigenisation policy, an official said on Tuesday.
Zimbabwe, which continues to lag its regional peers in investment attraction, registered $400 million in approved projects and a similar amount in actual foreign direct investment in 2013, according to official data.
The country got just 3% of total foreign direct investment (FDI) into southern Africa in 2013, the lowest in the region, according to the United Nations Conference on Trade and Development (UNCTAD).
At peak in the 1990s, FDI into Zimbabwe averaged 20% of the gross domestic product, compared to current levels around 4%.
The country, which ranks lowly on the World Bank’s ease of doing business index, also has a low project implementation rate, with less than 10% of approved projects turning into actual investments in the period between 2009 to 2011, according to the African Development Bank.
Analysts say Zimbabwe has lost out on investment flows into the region, first due to its decade-long political and economic crisis triggered by oft-violent seizures of white-owned land to resettle landless blacks, and more recently because of its drive to transfer majority control of all major businesses to locals.
Zimbabwe Investment Authority (ZIA) chairman Nigel Chanakira told journalists on the sidelines of UNCTAD’s World Investment Report for 2014 in Harare that approved investment projects between January and May this year have reached $400 million on the back of renewed interest in the mining sector.
“Seven out of 10 applications that ZIA is dealing with are in mining. Mining is deemed as the low hanging area where people will come through,” Chanakira said.
He said the easing of the government’s stance on foreign company ownership could see Zimbabwe attracting more investment this year.
“This year alone we have 162 investment approvals already and we are on the $400 million mark,” Chanakira said.
“If we go by comparison, $400 million is equivalent to what was approved and what was invested last year, so already our expectation of saying we will probably hit the $1 billion mark this year is realistic based on projections.”
Chanakira added that Zimbabwe could push on to attract $2 billion in planned investments next year on the back of the creation of special economic zones enjoying preferential investment terms, as well as anticipated greater clarity on the foreign ownership policy.
“If we do that, it will exceed everything that we have ever done historically,” he said, adding that the investment by India’s Essar into the former Ziscosteel would boost inflows.
— The Source