Leonard Ncube Victoria Falls Reporter
FINANCE and Economic Development Minister Cde Patrick Chinamasa says establishing more indigenous companies is critical towards attracting Foreign Direct Investments (FDI).
Officially opening the Institute of Chartered Accountants of Zimbabwe (ICAZ) 2014 winter school in Victoria Falls, Cde Chinamasa said the revival of the country’s economy was hinged on partnerships with the private sector, which he said was not coming on board because most businesses operating in the country were foreign owned.
He said from his engagement with different potential investors, they had expressed pessimism over lack of clarity and consistency on government policy, security of investing in Zimbabwe, cost of doing business in the country and poor infrastructure.
“The reality of our economy is that there is a structural shift from the formal to informal sector meaning we have a challenge to migrate these businesses into the formal line so they pay tax,” said Cde Chinamasa.
“I have been trying to craft a policy to attract FDI and am happy with what is happening so far even if you may not notice.
“Foreign investors have raised some concerns which they say hinder them from investing in the country and these are challenges we need to tackle if we are to attract FDI.”
Cde Chinamasa said plans were underway to synchronise all government policies to ensure they were clear and attractive to foreign investors.
“Creating indigenous firms is very important whether it would be difficult or not, we have to do it because the firms we have are just branches of international companies and can’t make a decision to partner government,” he said with particular reference to banking institutions.
“The task before us is to grow our own locally owned industry whether finance, mining, manufacturing etc so that in times like these we can sit and agree on something for the economy. Unless we have strong local firms, it is difficult for foreign investors to know who we are.”
In light of such considerations, the minister said government was working on reviewing the 2004 policy guidelines on joint ventures to try and open up for foreign investors.
He noted the crippling effect of the illegal sanctions imposed on the country and the $9,9 billion debt to external and international financers which makes it difficult for the country to access lines of credit.
Cde Chinamasa said inward foreign direct investment had remained critically low at 2,7 percent between 2009 and 2011 compared to other countries which have double digit contribution to the GDP.