Zimbabwean economy worsen as foreign investment declines
Foreign Direct Investment (FDI) in Zimbabwe continues to decline as the economic crisis worsens.
Figures show that FDI declined from $400 million in 2013 to $372,6 million last year. According to the Reserve Bank of Zimbabwe (RBZ) statistics released this week, the depressed FDI has worsened the country’s liquidity situation.
“Net foreign direct investment decreased to $300,6 million in 2014, from $373,1 million in 2013. Receivables decreased from $400 million to $372,6 million, while payments increased from $27 million to $72 million,” the central bank said in a 2014 inflation report.
The decline in FDI comes at a time other countries such as Mozambique and Zambia are experiencing strong economic growth due to increased FDI inflows.
A recent report by the International Monetary Fund noted that on a cumulative basis and compared to other countries in the region, Zimbabwe’s FDI inflows amounted to $1,7 billion over the period 1980 to 2013, whereas, Zambia and Mozambique received $7,7 billion and $15,8 billion, respectively.
Experts blame policies such as the seizure of white farms to resettle blacks and, latterly the drive to localise ownership of all major firms, for Zimbabwe’s poor performance in the FDI stakes.
President Robert Mugabe’s government, however, blames western sanctions, imposed on him and his inner circle over allegations of electoral fraud and rights abuses, for the country’s economic woes.
The RBZ noted that similarly, net portfolio investment flows declined to $96,3 million in 2014, from $114,2 million in 2013.
“Receivables decreased from $283,3 million to $270,7 million, while payments increased from $169,1 million to $174,4 million in the same period. The low FDI and other external inflows conspired to dampen economic activity, with knock-on effects on incomes, aggregate demand and declining prices,” said the RBZ.
Central bank governor John Mangudya recently said the government was committed to sound policies to boost FDI inflows, which peaked at nearly 20 percent of the gross domestic product in the 1990s.
“We are anxious to ensure that Zimbabwe benefits from the quantum leap in economic development in line with the rest of the region and also to benefit from the increased foreign direct investments that is coming into Africa which increased by almost seven percent to $52 billion in 2013,” Mangudya said.
“This trend is increasing and Zimbabwe should also benefit. It should not be left behind. Zimbabwe is committed to join Africa in the Africa rising campaign by pursuing credible economic policies for the eradication of poverty and the increase of the welfare of the population,” he added.
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