Zimbabwe Investment and Development Agency (ZIDA) hails domestic investments growth

ZIMBABWE has witnessed a significant surge in domestic investments in the past two years despite the negative effect of the Covid-19 pandemic, the Zimbabwe Investment and Development Agency (ZIDA) has said.

The investment authority said amid the growing investment from local investors, focus was now shifting towards improving ease of doing business for local firms, a key enabler for higher foreign investment.

“Some of the biggest investments we have seen in the past two years are from locals and we are now pushing for direct domestic investment,” Tino Kambasha, chief investments and corporate affairs officer at Zida told our Harare Bureau.

“Yes, we need foreign direct investment but we should also be aware that there are people with money, they are already here, they know their market and that is now our focus . . . improving ease of doing business (for locals) in their own country.

“Once we do that, everyone else (foreign investors) will have confidence in our economy.”
According to studies, high domestic private investment is a signal for high returns to capital, which attracts foreign investment.

Last year, foreign investment in Zimbabwe increased to US$91,4 million from US$40 million in 2020, according to the Reserve Bank of Zimbabwe.

IH Securities, an equities research firm, said the low foreign investment inflows in Zimbabwe in the last two years was partly due to the Covid-19 pandemic, as this affected investment flows globally.

The research firm expects aggregate foreign direct investment inflows into Zimbabwe to remain subdued this year.

However, based on 2021 observations, IH said foreign investment towards the mining industry would increase. “Despite a down drift in foreign direct investment, capital injection from local investors has gained momentum in the past few years.

“We have witnessed an up-tick in corporate transactions and equity financing as companies expand via mergers and acquisitions as well as organically.

“Of note, was the announcement of the potential acquisition of a 31,22 percent stake in First Mutual Life by CBZ Holdings in 2021,” IH said.

Another notable local transaction was the acquisition of the Eureka Gold Mine by Padenga Holdings’ subsidiary Dallaglio.

According to Padenga, US$50 million will be invested into the mine.
There has also been significant investments in the gold sector after the Government enacted a law allowing gold mining companies to retain more US dollars if they invest in exploration. Gold is the country’s largest foreign currency earner.

The auction system is also providing foreign currency to local companies and the small to medium enterprises to acquire capital goods.

There was a marked increase in the number of participants on the auction system as applicants rose from about 500 at the beginning of 2021 to reach a peak of just over 2 000 by year-end.

The auction system has provided essential liquidity to key productive sectors of the economy, leading to enhanced capacity utilisation and significant import substitution.

Most of the auction allotments went towards imports of raw materials, machinery and equipment.-Chrnicleo.zw