Zimbabwe should fix its business environment and make the economy conducive for investment to unlock its growth potential and ride on its resource riches, Mateus Magala, country representative for the African Development Bank (AfDB), said on Wednesday afternoon.

Speaking at a summit in Victoria Falls to promote consumption of locally produced goods, Magala said infrastructure funding deficits are also hobbling the country’s growth prospects as investors flock to countries with a sound infrastructure framework. Zimbabwe’s economy continues to bleed jobs and is becoming increasingly informal as companies close shop.

“We need to promote infrastructure as an opportunity for investors. Zim could emerge as an attractive investment destination because of its large and diverse range of resource reserves, improved macroeconomic environment and growth momentum,” said Magala.

However, in order to unlock its potential Zimbabwe should promote a conducive business environment. Said Magala: “Investors are there and are ready, but they need a conducive environment."

Zim must resolve debt issue

He also urged the government to promote public private partnerships in infrastructure areas such as energy. Additionally, the AfDB said Zimbabwe should work hard on arrears clearance and debt resolution.

The country’s debt overhang has surged to $10-billion. About $7-billion of this is owed to external creditors, mainly multilateral funders and financiers such as the International Monetary Fund and the World Bank, among others.

Magala urged Zimbabwe to resolve the debt issue. He said a committee consisting of the AfDB, Finance Minister Patrick Chinamasa, the Reserve Bank governor and other partners is working towards producing a roadmap by August to achieve this. "It will require political will,” said Magala.

Zimbabwe’s economy has been weighed down by slowing productivity in key sectors such as manufacturing and agriculture. Its only top performing export sector is mining, but this is also suffering depressed commodity prices.

Grace Muradzikwa, chairperson of pressure and lobby group Buy Zimbabwe, said: “The economy is operating against the heavy burden of a high import bill. Our local companies should look at ways to increase market share against high imports and high costs of borrowing.”

Magala said Zimbabwe has a high risk perception which is fuelling investor scepticism and slowing down infrastructure investment. The country requires about $2-billion to fund infrastructure projects every year but is managing only $800-million, leaving a funding gap of about $1.2-billion each year.

News24.com