eBusiness Weekly
Zimbabwe has witnessed an increase in investment enquires and commitments from foreign investors under the new dispensation. Business Writer Martin Kadzere (MK) talks to Richard Mbaiwa (RM), Zimbabwe Investment Authority chief executive about Zimbabwe’s investment prospects.
MK: The new dispensation has changed Zimbabwe’s perception among investors as evidenced by a massive increase in investment commitments coming through. Do you see these commitments translating into real investment?
RM: Yes, we believe that most of these commitments will translate into real investment.
MK: What has really changed when you look at Zimbabwe’s current investment climate compared with situation before the new dispensation?
RM: What matters most to investors is clarity and consistency of investment policy and legislation. The clarification and pronouncement made on the indigenisation and economic empowerment regulations and the commitment to compensate farmers are key signals of the new dispensation on investment matters. Furthermore the passion of the government to pursue the reform agenda is another signal. The President has also declared that ‘Zimbabwe is open for Business’ which is an important statement in terms of engendering investor confidence. Added to that the Investment Guidelines and Opportunities document launched in January has a policy statement signed by the President, which clearly guarantees security of investment and non-discrimination, among other things. These developments have helped to change the image of the country and brought much needed confidence in the economy as an investment destination.
MK: From your interactions with potential the investors, what are their views about the new dispensation?
RM: All the investors that we have interacted with at various fora since the coming in of the new dispensation are very upbeat about the prospects for investing in Zimbabwe and there is a general feeling that the country is in the right direction in terms of openness to business and reforming the doing business processes in the country. There is a lot of goodwill and confidence in the new dispensation, which can be seen from the upsurge in investment enquiries, commitments and approvals that we are handling now. Investors are indicating their willingness to partner the government of Zimbabwe in rebuilding the economy.
MK: From the enquiries you are receiving, which sectors are investors most interested in?
RM: The interest ranges across all sectors of the economy, but the mining sector value chain seems to be leading the pack. There is also increased interest in the energy sector, including renewable energy. Other notable sectors include agriculture and agro-industrial sector, various manufacturing activities as well as tourism.
MK: You have been with the Zimbabwe Investment Authority for many years. Could you say the interest being shown by the potential investors is the best ever?
RM: I would say that the interest being shown by potential investors at the moment far exceeds anything that we have witnessed in this country before. Statistics show that the previous best performance by Zimbabwe in the area of Foreign Direct Investment prior to the economic meltdown, was in 1998 when the country managed to attract about $444 million worth of FDI according to UNCTAD annual World Investment Report. This is a far cry from what we are witnessing at the moment.
MK: Given the current momentum; and if that can be maintained, were do you expect to experience the strongest growth in the next few years and, which sectors are likely to experience the highest levels of investments?
RM: I am optimistic that the current momentum will be maintained and even continue to increase. The growth will be driven by the mining sector, not only in terms of extraction but also value addition and beneficiation of minerals such as platinum, lithium, chrome, diamonds among others. The infrastructure sector is also going to be a major driver of growth as our transport infrastructure network is revamped (roads, rail and aviation).
Manufacturing is also going to grow as there is going to be emphasis on value addition and beneficiation of commodities coming from both the mining and agricultural sectors. Manufacturing is also important as it provides the necessary inputs required by the other major sectors of the economy thus creating critical forward and backward linkages. As the other sectors of the economy grow, there is going to be increased demand for power, for instance, and the services sector is also going to fuel more growth, including ICT.
MK: In your opinion, which economic or social sectors look most or least attractive?
RM: I cannot say that there are any sectors which look most or least attractive. Like I indicated above, there is going to be a lot of linkages across all the sectors be it economic or social. I can see the country also becoming a hub for social services such as in the education and medical sectors as well. Remember these sectors by nature complement each other.
MK: What do consider to be the greatest risk facing investors who are looking to invest in Zimbabwe? Are there any substantial risks that you may talk of and how can these risks be reduced?
RM: There are no major risks that I can think of. However there is need to deal with the issue of liquidity in so far as it affects both internal and foreign payments and or transactions. Increasing value added exports will be key to mitigating this particular risk as well as mobilising more diaspora remittances and investments as well as FDI.
MK: We have had some recent surveys ranking Zimbabwe as among most sought after destinations for investment. What do you say about this?
RM: It is very exciting for the country to be ranked amongst some of the most sought after investment destinations in the world and this can only be proof that the policies that government is taking including re-engagement efforts are in the right direction.
MK: Some people say the real investment will only start flowing in after the elections. Do you subscribe to this? And if so, why?
RM: I personally do not subscribe to that notion. Most investors that I have spoken to are saying that now is the right time to invest in Zimbabwe. However some of the commitments that are being made now may not necessarily materialise before the elections as some investments by their nature have long gestation periods to allow for feasibility studies, due diligence and capital raising among other considerations.
