By Bernard Mpofu, HARARE, October 23 (The Source) – Zimbabwe’s net foreign direct investment flows are seen contributing a meagre two percent of the gross domestic product over the next two years as the Southern African nation misses out on strong Sub Saharan Africa growth rates, an International Monetary Fund regional economic outlook report has shown.
According to the latest IMF regional outlook Zimbabwe’s economy will maintain initial growth projections of 3,1 percent this year before marginally increasing to 3,2 in 2015.
Experts blame policies such as the seizure of white farms to resettle blacks and, latterly the drive to localize 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.
Zimbabwe’s central bank figures show the country registered a meagre $67 million in foreign direct investment in the first half of 2014, down from $165 million over the same period last year.
The data shows 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.
Mozambique and Seychelles have the highest net FDI as a percentage of GDP at 29 percent and 16 percent respectively.
Speaking at the launch of the report in Harare on Thursday, central bank governor John Mangudya said the government was committed to sound policies to boost FDI inflows, which peaked at nearly 20 percent of the GDP 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.”
IMF director in charge of the African Department Antoinette Sayeh said sub-Saharan Africa’s growth trends will remain favourable, registering growth rates averaging five percent.
“We expect the region’s economy to expand by five percent and 5,75 in 2015, and sub-Saharan forecast to remain the second fastest-growing region in the world, just behind emerging and developing Asia,” Sayeh said.
“However this positive picture co-exists with the dire situation in Guinea, Liberia and Sierra Leone where the Ebola outbreak is exacting a heavy human and economic toll.”
University of Zimbabwe economics lecturer Ashok Chakravarti said the projected underperformance of South Africa, Zimbabwe’s main trading partner will affect exports.
He said Zimbabwe should diversify its exports, warning that its dependence on primary goods may have a negative on the economy should commodity prices continue to be tumble.
“As the IMF said, growth rates in South Africa are going to decline and that is going to have an impact on our ability to export to them,” Chakravarti said. He said treasury should consider rebasing national accounts saying this could boost the country’s GDP as economic continues to be driven by the informal sector.