Zimbabwe is eyeing $1 billion in foreign direct investment this year despite concerns about its unclear empowerment policies and continued isolation by the international community.
President Robert Mugabe’s government said it expects most of the investment to flow from China, Russia and India as it seeks to kick-start an economy that has suffered years of collapse.
The government has embarked on a charm offensive to improve the country’s image abroad and authorities say the strategy is bearing fruit.
According to a quarterly bulletin by the Macro-economic Planning and Investment Promotion ministry’s 2015 fourth quarter macro-economic bulletin, a number of deals signed between Zimbabwe and countries such as Russia, China and India in 2015 would be implemented this year.
Major deals were signed with Chinese, Russian and Indian investors and the economy is poised to receive triple FDI inflows
“Major deals were signed with Chinese, Russian and Indian investors and the economy is poised to receive triple FDI inflows in 2016 as a sign of increased investor confidence,” the ministry said.
A least 60 foreign delegations visited Harare last year to explore investment opportunities and China contributed the most, a development the ministry said showed investors were interested in Zimbabwe.
“Overly, this explicitly shows that the country’s investor perception is continuously improving owing to the investment climate reforms that government is currently undertaking,” the ministry said.
However, Finance minister Patrick Chinamasa in his 2016 budget statement only estimated investment inflows to reach $650 million this year.
There is discord in Mugabe’s government over strategies to attract investment, with some hawks openly expressing anger over Chinamasa’s policy to re-engage Western countries.
Youth, Indigenisation and Economic Empowerment Minister Patrick Zhuwao is one of the ministers who say trying to lure investors from the West is a worst of time.
Zhuwao, a nephew of Mugabe says the country should instead try to tap into resources held by Zimbabweans in the Diaspora who said to have about $50 billion in savings.
Analysts say the biggest obstacle to investment in Zimbabwe is the Indeginisation law that was signed into law by Mugabe in 2008 and forces foreign owned companies to cede 51 percent of their shares to locals.
The various delegations that visited Zimbabwe last year from countries such as the United States, United Kingdom and other European Union members also expressed concern about the law.
China and Russia also showed some discomfort with the law.
Meanwhile, the country’s 2016 budget strategy paper says ongoing reforms to improve the country’s investment climate could spur growth of greenfield projects as Zimbabwe continues to face chronic liquidity constraints.
Zimbabwe’s FDIs, according to the latest United Nations world investment report, leapt to $545 million in 2014 – less than five percent of the country’s gross domestic product — from $400 million in the previous year, driven by interest in mining, infrastructure and services.
Source: The Africa Report