After the formation of the inclusive government in 2009, the country experienced economic stability and growth but has not recorded much foreign direct investment (FDI).
Peter Nicholas, the World Bank’s country manager told Standardbusiness that Zimbabwe had to address shortcomings on its macro-economic policies and infrastructure before it can record substantial FDI.
“Uncertainty about the investment climate and the absence of a transparent regulatory framework are factors discouraging or delaying private investment,” he said.
Although the unity government managed to halt galloping inflation and opened up the economy, experts say the regulatory framework is still a cause for concern.
At a recent business symposium, lawyers criticised the continued use of legislation such as the Companies Act and the State-Indebted Companies and Reconstruction Act, which they said were not business-friendly.
“Ailing infrastructure, especially energy, is a key constraint to the business sector and service delivery,” said Nicholas, adding that unreliable power supply was hindering business sector growth.
“Other impediments include insufficient domestic liquidity and very high real interest rates on short-term credit, high labour costs and the regulatory burden,” he said.
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Nicholas also indicated that the Bretton Woods institution would only restore normal relations with Zimbabwe when the country clears its outstanding debt.
Meanwhile prominent economist, Eric Bloch, believes Zimbabwe can get itself out of the multilateral debt trap by initiating relevant austerity measures.“Zimbabwe should stop alienating itself from the international community through perpetual ranting against Western nations,” Bloch said.
He said government could negotiate for rescheduling of the debt or pursue the Highly Indebted Poor Countries (HIPC) route.
But some sections in government have argued against the HIPC route — which would see major donors writing off Zimbabwe’s debt — citing sovereignty issues.
