A SENIOR Zimbabwean official on Tuesday said investment had been badly hit by President Robert Mugabe’s laws limiting foreign ownership of businesses, as the country endures further economic decline.
The 2007 “indigenisation” law compels foreign firms to cede 51% of shares to local partners, in a move that Mugabe said would benefit Zimbabwe’s majority black population disadvantaged by colonial rule.
But Desire Sibanda, the secretary for economic planning and investment promotion, made a rare criticism of the policy, saying a new wave of potential foreign investors had shunned Zimbabwe due to the laws.
“The first problem they have raised is the indigenisation and economic empowerment act provisions (which) they perceive as a disincentive,” he told a parliamentary committee.
“They are saying it denies the foreign investor a controlling stake in their investment.”
Sibanda said Zimbabwe had received more than 40 foreign delegations scouting for investment opportunities, but they all raised concern over the regulations.
“They strongly recommended that we should reform our investment climate,” he said, adding that GDP had fallen rapidly between 1996 and 2008.
Nevertheless, the southern African nation backed investment deals worth about $970 million compared with $555 million in the same period last year, Sibanda said.
The largest batch of approved applications was for manufacturing projects at $722 million followed by mining at $156 million and construction at $7.4 million.
The International Monetary Fund said this year Zimbabwe’s prospects looked “difficult”, with growth falling again after a brief improvement.
Zimbabwe’s economic decline is widely blamed on Mugabe’s land reforms, under which many white-owned farms were seized and the agriculture sector collapsed.
Food shortages, rampant inflation, economic sanctions and disputed elections have also added to the country’s woes in recent years.
Mugabe’s government last year vowed to amend the indigenisation law, but no action has yet been taken.. .