HomeBusinessHuge drop in US investments in Zim

Huge drop in US investments in Zim


Zimbabwe received a negative US$2 million worth of investments from the United States last year, a huge drop from the US$37 million.

According to the Bureau of Economic Analysis of the United States Department of Commerce (BEAUSDC), US direct investment in Africa dropped by nearly 5% in 2018 to US$47,8 billion from a comparative of US$50,3 billion in 2017.

The drop in US investments in Zimbabwe came at a time when President Emmerson Mnangagwa’s government was working overtime to attract American investors.

US Bureau of Economic Analysis chief of public affairs and outreach Jeannine Aversa told Standardbusiness that she did not have detailed data to explain the drop in investments.

“In the case of Zimbabwe, one reason for the negative position could be if a foreign affiliate borrowed funds from the US parent (companies) that exceeded the historical cost of the assets,” she said. “Another reason could if the value of repatriated profits exceeded current period earnings”.

According to the BEAUSDC, research into US direct investment abroad, or outward investment, looks at a US investor who owns at least 10% of a foreign business.

“Data on direct investment includes transactions between affiliates and their owners, the income that the investors earn on their direct investments, and the cumulative value — or position — of inward and outward direct investment,” the BEAUSDC website reads.

Investment trends indicated that US investors sought areas where they can get high returns with clear exit opportunities.

One of the limiting conditions in investing in Zimbabwe has been US targeted sanctions, which have increased the risk of doing business in the country.

However, corruption, bureaucratic red tape, policy inconsistencies, lack of national engagement and the property rights deficit are largely responsible for deterring investment.

Some of the big US firms that have shown interest in investing in Zimbabwe since last year are General Electric and Abbott Laboratories due to ongoing efforts by the US embassy in Harare to get American firms to invest in the country.

In June, it was reported that Zimbabwe and Zambia had chosen General Electric and Power Construction Corp of China to build a US$4 billion hydropower project straddling their border.

Meanwhile, Abbott and its foundation, the Abbott Fund, provided more than US$500 000 in grants and healthcare products to support Cyclone Idai relief efforts in Mozambique, Malawi and Zimbabwe.

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