UK’s largest bank endorses Zim

The United Kingdom ( UK’s) largest banking group, Lloyds Bank, says reforms under the new administration offer hope for significant growth in Foreign Direct Investment ( FDI) in Zimbabwe.

Notably, the bank said this after seeing foreigners dominate mergers and acquisitions despite a dip in in the year 2019.

FDI

Lloyds Bank said foreign investors have been dominating the mergers and acquisitions scene in Zimbabwe, with about 73 percent of all the approved mergers since June 2017 having been concluded by or with foreign investors.

Some of the biggest mergers and acquisition deals of 2018 included a merger between Linde and Praxair

AG incorporation, as well as the acquisition of 49 percent shareholdings in Niculata Investments Limited by Vilmorin Singapore.

The recession that Zimbabwe experienced in 2019 following the passage of cyclone Idai and the drought caused by El Niño consequently suggests poor performance in terms of FDI.

inflows into Zimbabwe decreased

FDI significantly to US$ 280 million in 2019, compared to pre-crisis period ( US$ 745 million in 2018).

The value of greenfield investments

FDI in the country in 2018, the highest annual figure in more than a decade, reached the staggering US$ 6,1 billion.

“In the same year, total stock

FDI reached US$ 5,7 billion.

“The end of Robert Mugabe reign brings hopes of reforms that should stimulate the investment,” Lloys Bank said.

Zimbabwe’s foreign direct investment stock has grown from US$ 4,68 billion in 2017 to US$ 5,4 billion in 2018 and further up to US$ 5,7 billion.

The British bank said the is mainly

FDI directed towards the mining sector areas of diamonds, gold, nickel, and platinum, infrastructure as well as the wood industry, healthcare, water and sanitation, financial services, tourism, manufacturing, and agriculture.

Zimbabwe has a very rich natural potential (second largest reserve of platinum and chrome; diamonds, coal, gold, platinum, copper, nickel, tin) and an adequate infrastructure (except for recurrent power cuts), which represent genuine assets to foreign investors.

China has been the leading investor in Zimbabwe.

Russia, Iran, and India have also become very important investors in the country.

The bank noted progress that has been made in obtaining building permits, obtaining loans, and resolving insolvency to promote and attract investment.

It also said the Government seeks to attract and has implemented the Zim

FDI babwe Investment Authority (now ZIDA), which is the country’s premier investment promotion body set up to promote and facilitate both foreign and local investment.

“However, the unpredictability of the government’s economic policies and the unstable political and economic climate in recent years has undermined foreign investment,” the bank said.

Lloyds said Zimbabwe’s strong points in terms of attracting include abundant

FDI mineral resources (platinum, gold, diamond, nickel), agricultural wealth (maize, tobacco, cotton), and potential for tourism development.

The factors hindering foreign investment in Zimbabwe, Lloyds Bank said, included economic and financial situation characterised by a long period of hyperinflation, shortage of cash, and under-investment in infrastructures (especially energy infrastructure).