The Sunday Mail
Zimbabwe may soon start seeing huge investments amid heightened foreign investor interest as the allure of the policy reforms driven by Government becomes increasingly attractive, the country’s largest financial services group, Old Mutual, has said.
Investors, especially from South Africa and Europe (Britain in particular), made several enquiries this year, as they sought clarity on currency reforms implemented in February 2019.
In his 2019 Monetary Policy Statement, Reserve Bank of Zimbabwe (RBZ) Governor Dr John Mangudya introduced an interbank market for foreign currency as well as a new national currency, RTGS dollar.
Government is in the process of realigning all new laws with the country’s Constitution, including pieces of legislation that have bearing on business and investments.
It is also undertaking reforms to improve the doing business environment.
Further, it has also adopted austerity measures designed to rein in reckless budget expenditures, which perennially have caused deficits.
Efforts are also underway to enhance revenue inflows and restructure parastatals and SOEs in order to improve their performance.
The initiatives will be underpinned by Government’s two-year short-term economic blueprint, the Transitional Stabilisation Programme (TSP), which targets low -hanging fruits to ancho the economy.
These, among other policy pronouncements have ignited interest from potential foreign investors who are watching implementation of the reforms with the intention of channelling investments funds into the economy for various projects.
In an interview with The Sunday Mail Business, Old Mutual Investment Group fund manager Benjamin Sithole said the implementation of reforms by Government was crucial in building confidence among foreign investors and comes at a time general enquiries about the investment landscape is increasing.
“It is just a matter of time; I think in time we may start to see foreign investors wanting to put money into the country. What we are seeing now are the general enquiries,” he said on the sidelines of a Zimbabwe Stock Exchange (ZSE) masterclass workshop held in Harare recently.
“It looks like they (investors) want to understand more on what is happening. There have been enquiries by foreigners seeking clarity on the USD1:1RTGS ratio, but now there is clarity on that although there are still some issues we need to work on to make it more floating so we can boost more confidence,” he said.
Mr Sithole said growing enquiries were coming from South Africa, being the gateway to the Southern African region, while other foreigners that once invested in the country were also showing strong interest.
He said the implementation of the reforms as well as the role domestic investors played in building confidence was critical in increasing Zimbabwe’s chances of attracting more foreign direct investment.
“What is also important is what local investors are doing to help build confidence because when foreigners come, they want to partner with locals. As it is now there are things Government is working on, which is promising,” Mr Sithole said.
The current outflow of funds from the equities market, Mr Sithole said, was not unique to the ZSE, but a common phenomenon in emerging markets where fund managers move their funds to developed economies for projects in their own countries.
As such, he said Zimbabwe was in good stead to make a comeback on the investment radar.
A United Kingdom-based think-tank, Fitch Solutions, has also opined that ongoing reforms by the new Government had potential to improve the business environment and growth prospects, but only in the long term “since measures will take some time to implement”.
This should see investors pouring capital into the country, igniting economic recovery and improving disposable incomes, dovetailing into President Mnangagwa’s Government vision of transforming Zimbabwe into an upper middle-income economy by 2030. Prior to November 2017, when the new administration came into power led by President Mnangagwa, Zimbabwe had gone through two decades of isolation, ruinous economic sanctions and an unfriendly investment environment, which all conspired to cause an economic downturn despite being endowed with vast mineral resources such as gold, platinum, coal and diamonds.