investors hesistate to take risk in Zimbabwe

The economy is currently so emaciated that domestic investment funds are minimal, hence the need for recourse to foreign funding, concurrently with accessing state-of-the-art technology not presently available in Zimbabwe. it is indisputable that the Zimbabwean economy cannot recover substantially, despite its massive potential, without attracting substantial foreign investment.

 However, almost all investors turn their backs on Zimbabwean investment opportunities because they are deeply concerned that their investment will not be secure. That fear was initially fuelled by perspectives on political instability and unrest prior to the 2008 elections, and still exists albeit at much lesser levels.

Thereafter fears over investments insecurity intensified when Zimbabwe started implementing indigenisation legislation, enacted in March 2008, and vigorously pursued in the post-election period. Almost all investors are willing to have indigenous co-investors, but do not wish such investors to be imposed upon them, especially so when the co-investors are governmental entities such as the National Youth Development Fund.

The potential investor is also usually unwilling to have a minority status in the investment entity, which in terms of prevailing policies is the case, for government emphatically persists in its demands that non-indigenous investment participation not exceed 49%, with indigenous investment at 51% minimum.

That fear of investment insecurity is compounded by statements such as that recently made by President Robert Mugabe that all Zimbabwean economic entities should be 100% held by Zimbabweans, notwithstanding the president shortly thereafter stated publicly that foreign investors must comply with Zimbabwe’s investment laws and policies.

If 100% of investments are to be held by Zimbabweans (most of whom are devoid of investment funding) there can be no foreign investors, and hence no obligation to comply with Zimbabwe’s laws and policies. However, Mugabe’s subsequent statement does imply 100% of all Zimbabwean entities need not be held by Zimbabweans, and that foreign investment is acceptable. Nevertheless, such conflicting statements result in further investor concerns over potential investment insecurity.