Zimbabwe needs to aggressively improve its doing business environment and investment climate to boost foreign direct investment (FDI) which has remained stagnant for more than a decade, an official said Tuesday.
Negative publicity and poor perception of the country, policy inconsistency, liquidity challenges and Western sanctions are among factors that have affected FDI inflows into Zimbabwe, Richard Mubaiwa, the chief executive of the Zimbabwe Investment Authority (ZIA) said.
He was presenting oral evidence before a parliamentary committee.
He said Zimbabwe’s FDI inflows peaked in 1998 when they reached 444 million U.S. dollars before sliding and have been hovering around 400 million dollars over the past three years.
This is in stark contrast to its regional neighbours such as Zambia which has seen its FDI rising from 222 million in 1998 to 2 billion dollars in 2014.
“Zimbabwe’s FDI performance is below average when compared to other countries in the region. The doing business environment has been cited by investors as one of the major causes of this performance that is below par.
“Zimbabwe therefore needs to aggressively improve its overall business environment and investment climate,” Mubaiwa said.
He added that political stability, policy consistency and investor friendly environment were key in attracting foreign investment and boost economic growth.
Zimbabwe was in 2014 ranked 170 out of 189 economies on the World Bank Doing Business Indicators, a negligible two places up from 172 in 2013 and 170 in 2012.
The World Economic Forum also ranked Zimbabwe 131 out of 148 countries in terms of economic competitiveness in 2014 while on Transparency Internationals’ corruption index it is ranked 156 out of 177.
Mubaiwa said the low ranking of Zimbabwe on these important economic indicators was a worrying situation that needed immediate address.
The government in conjunction with cooperating partners such as the World Bank had started working on reforms to improve the ease of doing business in Zimbabwe, with recommendations already made on seven of the 11 indicators that are ranked by the WB, Mubaiwa said.
“Our target is that after all these reforms, we need to at least be in the top 100 when the next (WB ease of doing business) survey is done.
“If the doing business environment improves, it is one of the issues that will make us an attractive investment destination,” Mubaiwa said.
He also stressed the need for a review of the legal framework on investment so that it supports current reforms aimed at improving the investment climate. Enditem