‘Bottlenecks’ keep FDI low

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THE Zimbabwe Investment Development Agency (Zida) says foreign direct investment (FDI) into the country has remained low due to several factors, including the perceived ease of doing business in the country.
Since the turn of the millennium, the country has struggled to attract significant FDI.
“Feedback from engagements with potential investors within the quarter highlights the need to continue promoting the simplification of the investor onboarding process, improving the investment climate, and providing incentives for foreign investors as anchors in driving investment into the country.

“The agency has been working towards addressing these bottlenecks and continues to make progress through the implementation of various local and foreign initiatives,” Zida said in its second quarter of 2023 report.
Globally, FDI inflows fell by 31 percent in the second quarter of 2023, to $357 billion, down $509 billion in the first quarter of 2023 and 7 percent lower than the quarterly average of 2021. The decline in FDI was driven by several factors including, but not limited to, the ongoing war in Ukraine, rising inflation and supply chain disruptions.
Meanwhile, the agency has started to initiate domestic direct investment activities by engaging local companies, asset management firms, and commercial farmer unions to deliver value propositions and present investment opportunities for them to partake in.
“The roll-out of a 360-degree campaign to attract and license more local companies will be implemented in the third quarter of 2023,” Zida said.
“Provincial, foreign mission and embassy engagement initiatives are set to be rolled out at the start of the third quarter of 2023 following the approval of the calendar schedules.”
In the first half of 2023, the agency managed to attract investors from 32 countries. China had the highest number of investors and investment value, with mining being the most preferred sector followed by the manufacturing sector.
During the second quarter, the mining sector attracted the most investment, with 62 new licences issued and a projected investment value of US$202,7 million. The construction sector was the second-largest recipient of investment, with six new licences issued and a projected investment value of US$59,78 million. The services sector saw a significant increase in investment during the quarter under review, with 43 new licences issued and a projected investment value of US$41,94 million.
At least 68 percent of the projected investment value for all licences that were issued during the quarter were in the energy sector.
The energy sector registered 12 new licences with a projected investment value of US$723,91 million.
“The global boom in demand for energy has seen an increase in the number of investor inquiries into the sector. The highest projection for investment was from Zhongjin Heli Energy (Pvt), which proposed to bring in US$400 million towards coal mining and thermal power generation in Matabeleland North province.
“This is expected to eventually lead to increased power generation and reduction of the power supply deficit should all the projects be implemented as planned,” the agency said.