Zimbabwe approved a record $15,7 billion worth of investment project proposals, in the half year to June 2018, setting the stage for a potentially meteoric recovery of the country’s decades long battered economy, as foreign investors stampede to take positions in various sectors of the economy.
Comparatively, Zimbabwe approved only $1,2 billion project proposals for all of 2017, demonstrating the huge strides the country’s wobbling economy has made towards realizing potential double digit growth, given its current low base and stagnation it suffered for nearly two decades.
Finance and Economic Planning Minister Patrick Chinamasa, projected in his 2018 budget that Zimbabwe’s economy will expand by at least 4,5 percent, largely driven by agriculture and mining, but Government is well aware the potential far exceeds the forecast it has already made for the year.
Having lost an estimated 50 percent of its gross domestic product (GDP) over nearly two decades, with investors regarding the southern African country a risky jurisdiction, the Zimbabwe Investment Authority (ZIA) says, it approved 165 investment proposals valued $15,7 billion between January 2018 and June 2018.
The number of projects ZIA has already given the green light in the first half of the year represents a 166 percent jump when compared to the same period of 2017. This is a first for Zimbabwe.
Earlier, ZIA chief executive Richard Mbaiwa, speaking before collation of the figures for proposed investment approvals for the 2017 half year had been completed said; “I can’t give the exact figures yet, but what I can tell you is that the figures are way beyond what we did last year, the figures run into several billions of dollars, something that we have never done before.”
According to the official figures Business Weekly obtained from ZIA, coming on the back of frenzied investor interest amid growing confidence since President Mnangagwa took over the reins after 37 years of the rule of former president Robert Mugabe, significantly pale the 62 projects valued just at $609 million that the country’s premier investment body gave the green light last year.
Notably, the investment proposals that ZIA has thus far exceed, especially in value terms, the cumulative value of project proposals the authority has handled since dollarisation in 2009, when Zimbabwe only managed to attract a fair amount of foreign investment, average $400 million a year, before then having gone through nearly a decade of economic meltdown.
Nature of approved investments
Out of the 165 investment project proposals, 107 of the projects are by foreign investors, 57 are joint ventures between foreigners and locals while only a single project was by indigenous investors.
The mining sector leads the pack in terms of the number of approved project proposals with 59 (27 in 2017), followed by manufacturing at 44 (14 in 2017), services 33 (13 in 2017), construction 8 (2 in 2017), agriculture 6 (3 in 2017), energy 6 (1 in 2017), tourism 6 (1 in 2017) and transport 3 from only 1 last year.
The energy sector led with the biggest value of proposed investment projects, this is so despite only 6 projects proposed in this strategic sector, after investors applied to start projects with a combined value of $11,7 billion compared to only $97 million that they proposed over the same period last year.
The services sector registered the second biggest value of projects proposed by investors at $2,328 billion, which is favourably better that a mere $118 million investors who expressed interest to start in the first half of 2017.
Mining registered the third biggest value of the investment proposals at $1,11 billion from the 59 projects foreign investors intend to start in Zimbabwe, which is comparatively higher than the $264 million investments proposed last year and given the green light by the investment authority.
In the construction industry ZIA approved $288 million worth of investment project from $101 million last year.
Impact on the economy
For a $14 billion economy that is battling extreme levels of unemployment, crunching foreign currency shortages, low industrial productivity and measly exports and an uncompetitive industry regionally and globally, the $15,7 billion investments could have profound impact going forward.
The proposed investments ZIA approved are anticipated to create nearly 20 000 new jobs, generating estimated annual exports of $776,3 million. Investments approved in the first six months of 2017 had potential to earn the country only $37 million, while delivering just about 3 700 new jobs.
Growing confidence in Zim
Analysts attributed the sharp spike in the number and value of investment project proposals the country has received during the first half of the year to the new dispensation, which saw President Mnangagwa declaring the country open for business.
“If you look at the investments, they are across all sectors, but largely in mining (value wise). From 62 last year to 165 this year and in terms of value from $609 million to $15,7 billion. That is serious growth. We are not talking about proposals here; we are talking about approved proposals.
“If you go deeper you see that the value exceeds the cumulative approvals by ZIA since 2009, which has never happened. That shows you the impact ED’s administration has had on investors.”
Since his inauguration in November last year, President Mnangagwa has relentless declared his administration’s high regard for the need to give priority to rebuilding the economy by addressing investors concerns and resolving issues affecting ease of doing business.
The President has also emphasized the critical importance of international reengagement to end Zimbabwe’s years of isolation, including by seeking readmission of the country to the Commonwealth group.
Who has already committed to Zim
As a sign of growing confidence in Zimbabwe, a number of global companies have committed to invest in Zimbabwe and these include Cypriot firm Karo Resources, which intends to set up a $4,2 billion, the $1,4 billion lithium dumps processing project in Kamativi, $4,8 billion Emalahleni coal bed methane and energy project, $1 billion stainless still plant project by Chinese investors among many others.
Chinese firm, R and F company also intends to sink about $1 billion towards the revival of State owned still manufacturing giant, Zisco steel, which is currently mothballed.–ebusinessweekly.co.zw