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Friday, March 29, 2024
HomeBusinessZim Slacking-Off On Investor Reforms

Zim Slacking-Off On Investor Reforms

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Government has been castigated for its snail-paced approach in implementing investor reforms including making easier the channeling of dividend payments to investors.

As a result, the country has seen a downward spiral in investment inflows.

Many external investors have struggled to access dividend payments owing to foreign currency shortages in the country.

The concerns are being raised at a time government’s economic blueprint, the Transitional Stabilization Program (TSP) is coming to an end this December without having done much to guarantee investor gains.

The country is also about to launch the Victoria Fall Stock Exchange (VFEX), a secondary bourse expected to create offshore financial services in the resort town.

“This shows that TSP did not bring any favorable changes to the local business climate, which continues to deteriorate even further. International investors still find it difficult to repatriate their dividends and capital from the country. Economic output slumped under TSP and so did incomes for households and businesses. Manufacturing capacity utilization in the industry slumped from 48% in 2018 to 37% in 2019 and about 30% currently,’ said economic expert, Victor Bhoroma.

Emirates

Despite notable progress on the ease of doing business due to amendments of the Indigenization and Empowerment Act and improvements in turnaround times for business licensing, Foreign Direct Investment (FDI) inflows slumped from US$745 million in 2018 to US$259 million in 2019.

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Recently, the Minister of Finance and Economic Development, Mthuli Ncube admitted to difficulties in dividend payment of investors but hinted that the Central Bank was seized with the matter.

“We want guarantees that there will be full conversion and there is commitment from the Government and RBZ that the foreign currency will be made available.

“That’s why we want RBZ to be involved initially (at VFEX) but over time other banks with strong balance sheets and skills would also be involved,” said the Minister in a recent virtual market analyst briefing on the establishment of the VFEX.

The backlog to disburse the funds by the RBZ has prompted investors to abuse fungible shares such as those of Old Mutual, Seedco and PPC which are listed and tradable in other bourses to channel out funds before government ordered their suspension from the Zimbabwe Stock Exchange.

Last year Civil Aviation Authority of Zimbabwe (CAAZ) acting director general, Margaret Mantiziba declared that foreign airlines were shunning Zimbabwe over challenges in repatriating funds from local air ticketing proceeds to international airliners owing to foreign currency shortages in the country.

 

 

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