adminHarare Bureau
ECONOMIC commentators have called for an urgent need to deal with the high cost of doing business in the country which is scaring away Foreign Direct Investment (FDI).The value of investment projects approved by the Zimbabwe Investment Authority (ZIA) during the first four months of the year were worth $410,9 million, from $117,2 million during the same period last year.
Statistics from the investment authority show that over 30 projects have been approved this year, creating over 1,768 jobs.
The mining sector led other sectors of the economy, claiming the bulk of the investment projects followed by the manufacturing sector.
In separate interviews, economic commentators urged the government to improve the investment climate.
An economist, Prosper Chitambara said the poor roads, high utility bills and taxes were making Zimbabwe uncompetitive on a global scale.
“The high cost of doing business has eroded the national competitiveness of our economy. In terms of rankings for global competitiveness, we are actually in the bottom five. In terms of ease of doing business, we are actually in the bottom 10 and that goes to show how uncompetitive we are.
“It would be difficult for the country to attract meaningful and significant investment. Investors prefer to invest where the costs are low,” he said.
He said the high cost of borrowing was another issue that needed urgent attention. “The major sectors relate to the high cost of credit or borrowing. Our rates are averaging 20 percent and most businesses are not able to make a profit based on those rates,” he said.
“The other problem is the high cost of transport as a result of our infrastructure that is in bad state and that also affect the cost of production and of doing business. “We are also far from the coast or ports and this increases the cost of investing in Zimbabwe.”
He said coastal countries were doing well in terms of attracting FDI.
For example, Chitambara said Mozambique was now a third biggest recipient of FDI in sub Saharan Africa and South Africa.
“When you are landlocked it means you have to develop your transport network and infrastructure and your rail network so that it’s cheaper for investors to ship their goods in and out,” he added.
Chitambara bemoaned the perennial power challenges saying this was also chasing away investors.
“The cost of energy in Zimbabwe and the frequent power outages have forced companies to run on generators and it’s more expensive to rely on generators. Most machines in our industries require uninterrupted supply of power over long periods,” he said.
A Bulawayo-based economic commentator, Dr Eric Bloch also echoed similar sentiments adding that government needed to review some of the laws.
“There is need to review the Indigenisation policy especially in the shares where a foreign investor gets fewer shares after putting lots of money,” he said.
Dr Bloch said there was need to continue improving the political climate so that it could instill investor confidence.
He said Zimbabwe has a lot of investment potential.
A South African investor, Jim Stuart said it took a long cumbersome time before one starts a business in Zimbabwe if compared to other countries in the region.
“When you want to start a business in Zimbabwe you have to go through over 10 or so procedures before you start up and formally operate an industrial or commercial business,” he said.
He said this was discouraging investors from coming to set up business in the country.
Online Reporter