Afrexim Bank urges business reforms
THE African Export and Import Bank (Afrexim Bank) has urged Zimbabwe to expedite doing business reforms to attract increased foreign direct investment (FDI).
Despite having vast natural resources, the country has not attracted significant FDI in the past few years when compared to its regional counterparts, an Afrexim Bank official, Mr Gift Simwaka, said.
“We need to fix our investment climate as a country. Zimbabwe has not been getting enough FDI, hovering around $400 million, when others are getting up to $2 billion,” said Mr Simwaka while contributing during a Confederation of Zimbabwe Industries congress in Bulawayo last week.
“We need to know that businesses do not go to a country to assist its growth but to develop own resources.”
He, however, said Zimbabwe still has a good infrastructure, adding: “I see no reason why we can’t change the status quo.
“We need to work on areas where we have a competitive edge. We need to clear our arrears to reduce country risk”.
Country risk is a subjective yet critical factor in attracting FDI for a country as it affects investor confidence and informs the level of interest rates charged by financial institutions.
Reserve Bank of Zimbabwe Governor Dr John Mangudya, who attended the meeting, concurred that clearance of external and internal debt was a priority so as to attract fresh lines of credit for industry.
He said the country was targeting settling its external debts at least before October while working on a viable proposal on economic recovery. Dr Mangudya said clearing foreign debt would clean the country’s image.
Zimbabwe is already pursuing a robust business reform process led by the Office of the President and Cabinet aimed at improving the ease of doing business to attract FDI, which the country needs to promote economic growth and recovery.
This includes cutting the time it takes to open a business in Zimbabwe and a number of legal hurdles that cripple economic growth.
At the moment, Zimbabwe’s FDIs average $400 million per year, a figure that falls below regional economies that are attracting external investments at a value of above $2 billion per annum. The local business community has also been urged to collaborate with the Government in dispelling negative perceptions about the country in the international community so as to improve investor confidence and attract more foreign direct investment (FDI). —