INVESTMENT statistics released by the Zimbabwe Investment Development Agency (Zida) made startling revelations about the amount of potential billions that are supposed to flow into the economy.
Out of the US$9,6 billion worth of investment proposals licenced in 2023, over US$6 billion were in mining and energy sectors.
More than US$3,5 billion worth of projects from 20 investment proposals were licenced in the energy sector. Mining attracted US$2,5 billion.
Zida said a US$7 billion project, whose papers were submitted towards the end of last year, was still under due diligence processes.
These statistics point out that the bulk of licences issued in 2023 were foreign direct investments (FDI), through initiatives by Zida.
But that effort must be complemented by authorities in government by bridging the gap between proposal and implementation. Zimbabwe has a bad reputation for having good projects on paper but lethargy on implementation.
While some projects have been successfully implemented, the overall scoring has been dismal.
There are a plethora of bottlenecks on the ease of doing business comparing with other African countries, such as Rwanda. Some investors have bitterly complained about the exorbitant costs of doing business in Zimbabwe.
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Mining royalties, arguably the harshest in the region, coupled with onerous taxes hamper economic growth in many sectors, including tourism.
The discrepancy between the value of licenced tourism projects, at US$2 million, and the sector's pivotal role in the nation's recovery raises questions about the efficacy of current policies.
Continued political instability increases the risk profile of Zimbabwe — something which scares away investors.
To build confidence, the government has a responsibility to ensure a stable political climate. Perpetual electoral modes and inter-party internecine clashes paint a bad picture.
And this must be corrected if the government is serious about economic growth.
To translate FDI into tangible economic growth, Zimbabwe must strategically address key challenges and capitalise on opportunities to attract and retain foreign investment.
Investors worldwide crave stability and predictability in the business environment. Zimbabwe must provide a consistent policy framework, especially in areas such as the repatriation of dividends.
Policy consistency fosters investor confidence, assuring them that their investments are secure and subject to transparent regulations.
Zimbabwe should review fiscal policies, striking a balance between revenue generation and creating an investor-friendly environment.
Reducing unnecessary financial burdens will make the country more attractive to foreign capital.
While the energy and mining industries have huge potential, efforts should be extended to other sectors like agriculture, technology, and manufacturing.
A diversified portfolio of industries will not only attract a broader range of investors but also contribute to sustainable economic growth.
The persistent power crisis poses a challenge to investment implementation. Zimbabwe should prioritise investments in the energy sector, harnessing renewable energy sources and incentivising independent power producers (IPPs). A reliable and sufficient power supply is a critical infrastructure for businesses and industries to thrive.
The power crisis is a major drawback for investors.
Currently, existing power facilities have been generating between 1 000 megawatts (MW) and 1 500MW, against a national daily demand of between 1 800MW to over 2 000MW.
But experts say the country has potential to generate up to 1 900MW through solar, wind, geothermal, small hydropower stations, and biomass, working with IPPs.
Then there is the cancer in the public sector — corruption. The toxic behaviour within high public sector positions not only adds to the cost of doing business but also erodes investor confidence.
Zimbabwe must take decisive actions to combat corruption, implementing stringent measures to ensure transparency and accountability. A corrupt-free environment is essential for building trust with international investors.
It is imperative for Zimbabwe to implement strategic reforms, particularly in the face of counterproductive measures like hefty taxes introduced at the close of last year. Such actions risk compromising the nation's appeal to investors, with potential repercussions for businesses and employment.
