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Oliver Kazunga Senior Business Reporter
THE 2015 national budget should prioritise attracting foreign direct investment and reverse company closures to foster economic growth and development, economic commentators said yesterday.Finance and Economic Development Deputy Minister Samuel Undenge told delegates at the recently held Mining, Engineering and Transport (Mine Entra) expo in Bulawayo that the government has started consultations for the 2015 fiscal policy statement.
“Government has started consultations for next year’s budget which will have more fiscal incentives. The budget will be announced in November,” he said.
An economic commentator, Dr Lucky Mlilo, said since the liberalisation of the economy in February 2009, the country has lacked foreign direct investment which was critical for economic growth.
“In the 2015 national budget the government should look at issues of liquidity and investment friendly policies. One area where we are lacking is attracting foreign direct investment and this also explains why we have seen a lot of companies getting into judicial management or placed under liquidation. It is imperative for the upcoming budget to address the liquidity crisis through foreign direct investment,” he said.
Considering that the government was financially challenged, Dr Mlilo said, it should look at funding industries where the country has comparative advantage to promote economic recovery.
An economist with a leading financial institution, James Wadi, echoed similar sentiments adding that the upcoming fiscal policy statement should be anchored on reversing company closures.
“The issue of company closures has become a trend that the government should reverse. The budget should look at specific measures to address de-industrialisation and try to resuscitate key industries that are critical to downstream small and medium enterprises,” he said.
“When crafting the national budget we need to look at the pockets of such industries and those with export orientation and support them financially. In supporting them it should be done in such a way that there is a business plan with a time frame for turnaround,” said Wadi.
An economic commentator Wendy Mpofu added her voice saying it was critical for the government to look at elements that were crippling foreign direct investment attraction.
She said the Indigenisation and Economic Empowerment policy requires flexibility to attract funding and technology.
Mpofu said the Indigenisation and Economic Empowerment law was a good policy as it sought to empower citizens but should have some flexibility on specific sectors such as the diamond industry.
“We might not have the technical know-how in sectors such as diamond sorting and for us to attract investment in those areas the country needs not to put barriers that bar people with diamond sorting expertise from investing in the country,” she said.
A few years ago, the government promulgated the Indigenisation and Economic Empowerment Act to address the economic imbalances that existed as a result of colonialism.
Under the Act, all foreign-owned companies with a net turnover exceeding $500,000 are required to cede 51 percent shares to locals.
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