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AfricaEconomyZimbabwe

Zimbabwe’s FDI inflows growth averages 8% in last 6 years

By Almot Maqolo

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Zimbabwe’s Foreign Direct Investment (FDI) inflows reported an average gain of 8 percent ($452 million) in the last six years, with only 2018 recording the highest inflow at $745 million undoubtedly on renewed interest from investors to pour their money into the country amid years of isolation.

On the back of a small number of approved projects, Zimbabwe’s FDI inflows more than doubled to $745 million in 2018 from $349 million in 2017, according to the United Nations Conference on Trade and Development (UNCTAD). The southern African nation’s FDI went down by 62 percent from $745 million in 2018 to $280 million in 2019. In the 2020 monetary policy statement, Reserve Bank of Zimbabwe Governor John Mangudya attributed the decline to ‘heightened’ perceived country risk.

In January last year, there was violent protests which erupted across the country following the sharp fuel price increase. Fuel pump prices went up by 150% to $3.11 and $3.31 per litre of diesel and petrol respectively. Resultantly, the country’s image was once again seen badly.

Previously, lack of investment was attributed to lack of investor confidence, largely emanating from government’s policy inconsistencies. However, the new administration has been trying to woo investors through its “Zimbabwe is open for business” mantra. Experts say the southern African nation should up its game towards luring investors and be able to compete with other countries offering more favourable investment conditions.

In 2016, the country’s FDI inflows stood at $372 million, representing a 12 percent decline from $421 million recorded in 2015. For 2014, FDI inflows was at $545 million – the second highest so far in the last six years under review. The greatest decline was recorded last year.

“That country (Zimbabwe) continues to suffer from general economic decline and instability, making it a challenging location in which to invest,” UNCTAD stated in its 2020 world investment report. Despite, Zimbabwe’s FDI inflows at $280 million in 2019, makes it the southern Africa’s 5th largest recipient of FDI, according to UNCTAD. Sister country, South Africa tops the region at $4.6 billion followed by Angola at $4.09 billion. Mozambique and Zambia came in at $2.2 billion and $753 million.

FDI inflows for Botswana, Eswatini and Lesotho in 2019 stood at $261 million, $130 million and $118 million respectively. Malawi received $98 million while Namibia was the least at $17 million. The World Bank projected a 10 percent contraction of Zimbabwe’s economy in 2020, a worse outcome against the forecast Sub-Saharan Africa contraction of 2.8%. The country’s economy is set to recover to a marginal of 2.9% from an initial projection of 2.4%.


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