Zim gets US$259m in FDI

21 Feb, 2020 - 00:02 0 Views

eBusiness Weekly

Business Writer

Zimbabwe received just over US$259 million in Foreign Direct Investment in 2019, the second lowest since 2011. The previous low was the US$350 million recorded in 2017 while the highest was US$717 million recorded last year.

According to information released on Monday by the Reserve Bank of Zimbabwe in its 2020 Monetary Policy Statement, investments on the stock market also tumbled to just US$3,7 million in 2019 from US$54,7 million in 2018.

“The decline in both FDI and portfolio investment was, in large part, due to heightened perceived country risk,” said the RBZ.

Investment analyst Walter Mandeya of Trigrams Investment blamed persistent national economic uncertainty and the slow pace of reforms as the biggest deterrent to investment.

“Investment risk in Zimbabwe is heightened by failure by investors to repatriate funds out of the country. An estimated US$1,2 billion belonging to foreign suppliers, creditors and shareholders is locked in the country,” he said.

“Debt creating flows were also on the decline as most of the approved loans contracted by Government were not disbursed because of accumulated arrears,” said the RBZ.

Private sector long and short term loan inflows also remained low, marginally increasing from US$48,3 million in 2018 to US$49.3 million in 2019.

“This was in sympathy with both the contraction in the economy, which reduced its ability to absorb additional loans and the high country risk mostly associated exchange rate volatility,” the RBZ said.

Zimbabwe’s exchange rate has weakened from trading at par to the US dollar in early 2019 to the current 17,8.

Overall foreign currency inflows into Zimbabwe declined to US$6,8 billion in 2019, a 4,4 percent decline from US$7,2 billion in 2018.

Export proceeds, though down by 11 percent contributed the bulk of the foreign currency inflows at US$4,4                                                                                           billion.

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