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Analysts say clarity on the review of the country’s indigenisation policy will help improve the country’s economic performance in the second half of the year.
One of the key factors that has constrained economic performance in the first half of the year has been a lack of confidence on the part of foreign investors, which has had a negative impact on new capital flows into the economy.
Economist Trust Chikohora said the economy has been lacking positive stimuli.
“The major problem we have had in the first half is to do with liquidity challenges as well as a lack of confidence in the economy.
“As things stand now it is difficult to see any improvement in the liquidity situation going into the second half of the year. Confidence levels are likely to remain subdued unless there is a radical shift in policy or some unforeseen major event that would have a positive stimulus in the economy,” he said.
But he believes that the said review of the policy could provide just the right tonic for the second half.
“The talk about review in the indigenisation policy could have had a huge positive impact if it came out very clearly and unambiguously to demonstrate that we will now apply it in a manner which makes us more competitive in attracting foreign direct investment than other African countries.”
Last month, the government indicated that the indigenisation policy would be reviewed to also include the Profit Sharing Model (PSM).
Analysts at Lynton-Edwards Stockbrokers contend that the PSM model can be useful to Zimbabwe.
“We have found the Profit Sharing Model (PSM) interesting, and in our view it looks like a much better option that investors may find easier to work with. We believe so, because it’s a strategy which has worked well in other countries where it has been implemented.
“In Africa it has been used in Tanzania, Angola and Kenya. Indonesia has also used it in the oil and gas industry . . . Yes, the model is mostly found in petroleum exploration and development projects, but we believe it can be implemented with equal success in our mining and agricultural sectors,” said the analysts in a recent report.
Youth, Indigenisation and Economic Empowerment Minister Francis Nhema last week told a Sapes policy dialogue forum on indigenisation that consistency in implementing the indigenisation laws was vital to attract new investment into the country. — BH24.
derick.khumalo