HARARE – Zimbabwe will record its worst foreign direct investment (FDI) inflows in more than a decade this year with only US$150 million projects expected this year.
Finance minister Mthuli Ncube made the revelations when he presented his mid-year budget review last Thursday where he indicated that FDI inflows during the first half of the year were estimated at US$71,2 million compared to US$111,6 million recorded during the same period in 2019.
“FDI inflows for the year 2020 are expected to end the year at US$150.4 million, which is a 40% decline from the US$249.5 recorded in 2019,” Ncube said.
FDI inflows rose from US$105 million in 2009 to US$122,6 million in 2010 before jumping to US$344,1 million in 2011.
The inflows marginally went up to US$349,9 million in 2012 and rose gain to US$373,1 million the following year.
After the end of the government of national unity in 2013, the 2014 FDI inflows went up to US$472,8 million before tumbling the following year to US$399,1 million.
FDI took a nosedive again to US$343 million in 2016 and US$306,3 million in 2017.
In 2018, FDI shot up to US$717 million before plunging to US$249,5 million last year.
Zimbabwe has been performing badly in terms of attracting foreign capital compared to its regional counterparts.
According to the United Nations Conference on Trade and Development (UNCTAD) World Investment Report 2020, Mozambique attracted US$2,7 billion in 2018 and US$2,2 billion in 2019 .
Botswana attracted US$1,2 billion FDI in 2018.
Economist John Robertson attributed the low FDI inflows to government interference in business operations.
“Investors are hardly ever attracted to countries that favour central planning,” he said.
“Business does not need or want government participation and we are spoiling our chances with government demanding participation.
“And it shows that government plans to be deeply involved with every business sector and it clearly wants to have a strong influence over every business decision.”
UNCTAD has projected a 40% drop in global FDI this year due to the Covid-19 pandemic.
When he took over from long-time ruler Robert Mugabe following a military coup in 2017, President Emmerson Mnangagwa pledged that Zimbabwe would be “open for business”.
Mnangagwa, however, has been accused of doing very little to encourage FDI and the country still scores poorly on the latest Ease of Doing Business Index, at 140 out of 190 countries. – Standard