Zimbabwe’s poor infrastructure is a major challenge limiting economic development at a time when other regional countries’ are benefitting immensely from foreign direct investment, an Economist, Dr Prosper Chitambara has said.
Speaking during a socio-economic rights workshop on Friday, Chitambara who is a Senior Economic Researcher with Labor and Economic Research Institute of Zimbabwe (LEDRIZ) said Zimbabwe’s state of roads, railway system, obsolete equipment and high electricity cost coupled with unfavorable tax regimes could be the major challenges for low foreign direct investment in 2016.
“In 2016, Zimbabwe recorded a foreign direct investment of US$300 million while Mozambique racked in US$6 billion, Zambia US$5 billion and China US$200 billion.
“In 2015, Zimbabwe recorded US$350 million which dropped to US$300 million in 2016 and it could even go down in 2017,” said Chitambara.
He attributed low FDI to corruption and bureaucracy which he said is a big cost to an economy.
“Bureaucracy is a cost to doing business, In Zimbabwe, an investor has to pass through seven layers and in most cases has to pay a bribe at every layer,” he said.
Chitambara added that though the country has created a one stop shop for investment, that has not changed anything as government did not give power to the investment authority to approve licenses with the permanent secretary and the minister still the final authorities.
In countries like Singapore, it only takes hours to register a business while in Zimbabwe, it used to 90 days with recent reforms reducing it to 13 days. In addition other countries have relaxed regulations that promote foreign direct investment including tax holidays. With Zimbabwe political instability and corruption a major risk for investors, government should put in place incentives that improve competitiveness.
He also spoke on the issue of bloated government saying a lean and mean system allows savings while enabling prioritization on high return sectors such as agriculture and manufacturing.
“A nation can still prosper without external financial assistance, that’s one key lesson from China or Asia, you don’t need World Bank and IMF to develop, you can mobilise your own local resources to finance economic development,” said Chitambara.