BERNARD MPOFU
Zimbabwe should step up its efforts to attract foreign direct investment from Japan after it emerged that only two companies from the East Asian island country are now operating in the country from a peak of 40, Business Times has learnt.
The economy is currently facing strong headwinds that have seen rising inflation, a weakening fiat currency and voluntary company closures in recent days.
Embassy of Japan in Zimbabwe second secretary Yumi Sakata told this paper that hyperinflation in 2008 coupled with other economic challenges had unnerved investors from Japan. Zimbabwe ditched its local currency for a basket of foreign currencies mainly dominated by the United States dollar in 2009 due to runaway inflation.
The economy of Japan is a highly developed and market-oriented economy. It is the third-largest in the world by nominal GDP and the fourth-largest by purchasing power parity and is the world’s second largest developed economy.
She said now only two Japanese firms—Kansai Plascon which acquired former Zimbabwe Stock Exchange listed manufacturing concern Astra and Toyota Zimbabwe were the only firms operating in the country.
Experts have, in the past, attributed the low FDIs in the country to policy inconsistencies and high costs of running a business. “Most businesses left during hyperinflation because they were finding it difficult to operate. At the moment only two Japanese companies are operating in the country,” she said.
President Emmerson Mnangagwa has been singing the Zimbabwe is open for business hymn and has amended the indigenisation legislation which leaves the 51:49 percent threshold only applicable to diamond and platinum. Before the review, the legislation was seen as scaring away potential investors as prescribed that at least 51 percent of all business with a net asset value of at least $500 000 and operating in Zimbabwe should be in the hands of locals.
Desperate to attract more investment and unlock more lines of credit, government is now making frantic efforts to re-engage multilateral and bilateral creditors to improve the cash situation in the country.
Harare is seeking to clear the $1,2 billion arrears to the World Bank and $600 million to the African Development Bank in order to attract fresh funding.
Already government has cleared the $108 million IMF arrears using special drawing rights holdings and is now seeking up to $2 billion to stimulate economic activity.
Meanwhile Finance minister Mthuli Ncube is currently in Bali, Indonesia where he met creditors during the International/World Bank annual meetings.
Zimbabwe is currently ranked 159 out of 190 countries on the ease of doing business. According to the United Nations Conference on Trade and Development, Zimbabwe received $289 million in FDI last year, a meagre figure compared to regional peers like Mozambique
