- 168 new licenses issued in Q3 2024, valued at $1.171 billion, but actual investments lag behind
- Zimbabwe's business environment is plagued by bureaucratic red tape, corruption, high
- Only 27% of 2022 licensed projects were operational by September 2024, highlighting the gap between licensing and actual investment
Harare-The Zimbabwe Investment and Development Agency (ZIDA) has issued 168 new licenses in the third quarter of 2024, with a projected value of US$1.171 billion.
This is undoubtedly a promising sign for Zimbabwe's economy, especially considering that mining, energy, and manufacturing sectors dominated these new licenses.
"The mining sector had the highest projected investment value which accounted for 50% of the aggregate investment value, followed by the energy sector with 22%,” ZIDA said.
ZIDA licenced 74 new mining projects, which together would have a value of US$579 million. Manufacturing had 33 new licences, all worth US$183 million. Other key sectors were construction and tourism.
Five new energy projects, worth US$253 million where licenced while there were 28 new enquiries for mining, 14 for manufacturing, 13 for agriculture and 10 for mining.
However, let's take a step back and examine the bigger picture. ZIDA also reports licences with market value ranging above US$1 billion every quarter. However, by year end FDIs will be less than US$400 million according to RBZ data. This raise discripances between ZIDA data and actual investments.
Alarmingly, ZIDA's numbers reveal a stark disconnect: investors are shelling out billions for licenses, only to abandon operations. What's driving this bizarre trend? Are investors recklessly burning licensing fees or is ZIDA's data masking underlying issues?
The numbers don't add up. Either ZIDA's figures are inflated or Zimbabwe's investment climate is crippled by bureaucratic red tape, corruption, or inefficiencies. One thing is certain: something is broken.
While the number of licenses issued is impressive, it's crucial to remember that licenses alone don't necessarily translate to actual investment.
Simply issuing licenses doesn't guarantee that these projects will come to fruition or that the promised investments will materialize.
Zimbabwe's history of struggling to attract and retain investors due to various challenges, including bureaucratic red tape, economic instability, and infrastructure issues, cannot be ignored.
In 2022, ZIDA licenced 266 projects but only 72 where reported operational by end of September 2024. With only 27% of projects licensed in 2022 operational, this raises concerns about the effectiveness of licensing as a measure of investment.
This disparity highlights that licensing is not synonymous with investing. Many licensed projects fail to materialize due to various operational challenges.
Zimbabwe has great potential of luring investors across sectors, from mining, agriculture, manufacturing due to vast resources, arable lands but policing chases away these investments. In the mining sector, for instance, high operating expenses, coupled with steep taxes on lucrative minerals like lithium and platinum, can deter investors. The requirement to surrender portions of mining claims to the government also increases costs and reduces incentives.
Furthermore, Zimbabwe's business environment is plagued by high electricity costs, frequent power outages, and exorbitant licensing fees in the logistics sector – the highest in the Southern African Development Community (SADC) region.
These obstacles hinder the growth of licensed projects and undermine the country's attractiveness to investors. To truly leverage investments, Zimbabwe must address these structural challenges at a national level.
The government should prioritize streamlining processes, reducing taxes and fees, and investing in critical infrastructure like electricity. Special economic zones with tax breaks, such as the Xintai Resources Special Economic Zone in Beitbridge, are commendable, but sustained economic growth requires a comprehensive approach.
By tackling these challenges, Zimbabwe can create a conducive business environment that converts licenses into tangible investments, fostering economic growth and development.
Ultimately, Zimbabwe's economic prosperity depends on more than just licensing numbers. It requires a concerted effort to address the underlying operational challenges that hinder investment. By doing so, the country can unlock its full potential and translate licensed projects into thriving businesses that drive economic growth.
Equity Axis News