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Policy instability worry for investors

The study, conducted by the South African Institute of International Affairs, which covered the southern African region, also noted that electricity shortages were also constraining business in the region, at a time when Zimbabwe is suffering from chronic power shortages.

Although capacity utilisation in the manufacturing sector has been on the increase since the use of multi-currencies, power outages have been cited as militating against the sector from reaching its yesteryear peak of over 70%.

Currently capacity utilisation is at 57,2%.

Zimbabwe is desperate to lure foreign investors, but investor confidence has been plunging due to government policies and attitudes to outsiders. “It is difficult to conduct business in the majority of Sadc nations for a variety of reasons which contribute to a regional economic climate that is not conducive to investment or to development in general,” reads the regional report.

A different study by the World Bank found that Zimbabwe is ranked 171 in the ease of doing business, the third worst-ranked country in the region after Angola and the Democratic Republic of Congo, which are ranked 172nd and 178th respectively.

Mauritius, ranked 23rd, has the best ranking for southern African nations.

Zimbabwe slipped down the rankings this year after being ranked 168th last year. The regional average is 114.

Some of the policies that have haunted Zimbabwe include the indigenisation legislation which states that locals should have at least 51% in foreign-owned companies operating in the country.

While many investors view Zimbabwe as a potential investment destination, many are sceptical and have adopted a wait and see approach.

Analysts have said talks of possible elections this year have not helped in the country’s drive to convince foreign firms to invest.

President Robert Mu-gabe wants elections held this year, with or without the regionally-prescribed reforms and many fear the country may plunge to the 2008 depths, the climax of Zimbabwe’s economic, political and social meltdown.

Among other issues that were raised as constraining trade in Zimbabwe, were lack of access to financing, high tax regimes and inefficient government bureaucracy.

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