Bretton Woods institution, the World Bank says work outlined by the new Cabinet should determine the flow of foreign direct investment (FDI) into the country, as investors are increasingly warming up to the Second Republic.
A fortnight ago, President Mnangagwa appointed a new Cabinet and Professor Mthuli Ncube landed the critical Finance and Economic Development post.
World Bank country manager for Zimbabwe Mukami Kariuki, said while the region experienced a decline in FDI inflows in 2017, there was potential to increase such for the country. Last year, FDI inflows for Sub Saharan Africa region declined by 28 percent to $28,5 billion.
Ms Kariuki said the new Treasury boss had his work cut out and expected to come with measures that steer the economy forward and attract the much needed FDI.
“New work that will be outlined by the new Finance Minister and new Government should help determine the course the country will take and attract FDI,” she said at the Standards Association of Zimbabwe (SAZ) leader’s conference in Victoria Falls last week
She highlighted political stability and the macro-economic environment as some of the key determinants to foreign investment.
Infrastructure, rule of law, tax regime and policy consistency are some of the factors looked at before investors commit their money in a country. Some investors also look at indicators such as the World Bank’s Doing Business Report, Global Competitiveness Report, International Monetary Fund (IMF) World Economic Outlook reports and the African Investment Index.
The World Bank’s Doing Business Report, for instance, looks at the 11 areas of a business from starting a business to the regulatory procedures, dealing with construction permits, getting electricity, registering property and access to credit, among others.
Ms Kariuki said efforts were also needed to improve the country’s competitiveness in line with the regional levels so that Zimbabwe also tap into FDI inflows in the region and also in line with the Zimbabwean Government’s Vision 2030. Zimbabwe aspires to become a middle income economy by 2030.
“There is need to meet international standards to build investor confidence and attract FDI. Also align your standards with your future plans, in particular Vision 2030,” she said.
In an interview on the sidelines of the conference, SAZ director general Dr Eve Gadzikwa, was upbeat the Second Republic would have a conducive environment for business growth, increased FDI inflows and a booming economy.
She said the impetus was there for expedient economic revival.
“We are optimistic the new Government will take this nation to another level where the economy flourishes, we have been in isolation for long but there is hope. I think with the new dispensation, it’s our chance to show what we can do, and that it is possible to grow,” she said.
Since last November when President Mnangagwa took over the country’s leadership, investment commitments shot up.
The President has also emphasised Zimbabwe is “open for business” and has shown commitment to engage with the international community to mend relations that have been frosty in the past two decades.