The United States government says President Emmerson Mnangagwa’s government slow pace in following through with reforms has negatively affected the country’s potential to attract investment.
With the fall of President Robert Mugabe in 2017, there was so much optimism that the new government would open up the space for investment albeit after reviews of several reforms but the administration has failed to live to its billing as no meaningful reforms have been put in place.
When Mnangagwa came into power, he had a cocktail of reforms which he had lined up and he promised to quickly align them with various polices as this would lure investment.
However, a series of “unfortunate” incidents have left most would-be investors folding hands and waiting for the government to implement reforms.
Brutal killings of protesters by the army in January which left more than a dozen people dead, coupled with arrests of civil society and opposition members, has left the country isolated and in a worse state than it was in November 2017
In its recent report, 2019 Investment Climate Statements on Zimbabwe, the US said Mnangagwa needs to move with pace on reforms in order to bring the much needed foreign direct investment.
“Investor optimism following the November 2017 fall of President Robert Mugabe has weakened as President Emmerson Mnangagwa’s government has been slow to follow through on reforms to improve the ease of doing business, and a protracted currency crisis strains the economy,” said the US government.
It further stated that the Transitional Stabilization Program (TSP) if fully implemented would resolve many of the economy’s fundamental weaknesses.
It, however, said there were positives where the government did move quickly to amend the restrictive Indigenization (local ownership) law to apply only to the diamond and platinum sectors, opening other sectors to unrestricted foreign ownership.
“Nevertheless, investors remain cautious. Zimbabwe has attracted low investment inflows of less than USD 500 million annually over the past decade.
“Between 2014 and 2017, foreign direct investment inflows fell from USD 545 million to USD 289 million, but rose to approximately USD 470 million in 2018,” the statement.
The US further stated that lack of political will to deal with corruption and transparency have also hampered the chances for the southern African nation to move in the right direction.
“The government announced its commitment to improving transparency, streamlining business regulations, and removing corruption, but the last two years have brought only modest progress,’ it said.
Yesterday, Mnangagwa swore in eight members of the Zimbabwe Anti-Corruption Commission (ZACC) a constitutional boards tasked with dealing with corruption cases after several outcries from members of the civil society on his reluctance to act on corruption.
The US government further stated Zimbabwe’s incentives to attract FDI include tax breaks for new investment by foreign and domestic companies and making capital expenditures on new factories, machinery, and improvements fully tax-deductible.