Understanding the kind of Foreign Direct Investment (FDI) that comes into the country is very critical as some of it might be negative and end up destroying local investors, renowned investment banker, George Menyere has said.
Manyere told a CEO Conversations breakfast meeting hosted by Business Weekly yesterday that it is critical to understand FDI from various perspectives.
Zimbabwe has been on an aggressive drive to lure foreign direct investment in its efforts to boost the country’s economic growth and development.
The country has since been declared open for business.
Manyere, however, said not all FDI is positive for the country as some might be negative to the extent of killing local investors, and do not create jobs.
He said that kind of FDI is generally negative although there is money coming in.
“My hope is that Zimbabwe does the opposite and we attract more positive FDI where its backed up by real GDP growth, which is the first critical measure.
“The FDI must also result in increase in productivity, job creation, human capital formation, and higher wages in foreign companies.
“When you see those trends coming through, then you realise that you are onto something, very fundamental.
“I think the opportunity that we have now, particularly with the re-engagement with western international capital is that it’s defined in a manner, it can help us achieve (a lot.)
“The issue of foreign currency shortage can be fixed with positive FDI. But when you have negative FDI, there is no money flowing into the country.”
Manyere noted Zimbabwe does not have a currency problem, but has a foreign currency shortage.
“Repatriation of dividends is not a problem if foreign currency is there,” he said.
Meanwhile, Frontier Markets Editor of the Wall Street Journal, Dan Keeler, said there was a lot of interest from across the globe in putting money to work in Zimbabwe.
“He said one of the key things the country need is to recognise and identify its strength, to think what it has to offer, something that is perhaps unique and the country’s is particularly stronger in.
“Other areas or other things that you need to focus on are transparency on governance, which is to make sure that the way companies are operated and the way Government is operated is done to international standards.
“So there is need for a clear understanding of the way companies manage their businesses and so on.
He said when it comes to investors looking into investing in the country, there is a sense that there is a window that is open right now and that could close.
“Some foreign capital tend to be impatient, but I do feel that Zimbabwe needs to take its time, that it needs to establish structures to ensure that the investment environment is clear and is open. But at the same time not to make it too open.
“You don’t want to have investors rushing in snapping up bargains and taking money out of the country. What you want is for the investment to be a two way street so that when investors do come in, they don’t just bring cash, but they also bring expertise, they bring skills, they bring a sense of purpose for the businesses they are investing in.
Keeler said while there is still time, there was also need to move fast.
He added that he was impressed with the business environment and the business people as well as the enthusiasm shown by the locals in trying to solve issues.