Zimbabwe unattractive PPI

By Daniel Chigundu

Badly needed... who will bring his money to Zimbabwe

ZIMBABWE which is battling to lure Foreign Direct Investment (FDI) to help capitalize struggling businesses and ease the liquidity crisis bedeviling the economy since dollarisation has been declared unattractive for business.

Results released from the global mining survey 2012/2013, produced by the Fraser Institute titled Policy Potential Index (PPI) has indicated that Zimbabwe’s mining rank has plunged from glory.

The PPI said Zimbabwe was only able to collect a mere 13.4 points out of 100 compared to 21.8 points recorded last year.

“High PPI represents policy attractiveness whilst a low reading indicates unattractive policies. The low reading saw Zimbabwe ranked 91 out of the 96 jurisdictions compared to 74, thus leaving Zimbabwe sitting in the list’s bottom 10 countries,” said the survey.

Since 2009 Zimbabwe has had to do with an unstable political environment that was laden with unnecessary clashes between political parties that formed the inclusive government.

The clashes are also blamed for producing an unattractive economic environment characterised by policy inconsistences and diverging views regards the implementation of the controversial indigenization policy.

According to economic analysts these wrangles are the major reason behind the country’s poor performance.

Other nations that had the least ranking on policy attractiveness were Indonesia, Vietnam, Venezuela, DRC and Guatemala.

Finland on the other hand had the highest ranking of 95.5 points with Sweden on second position while Botswana in terms of African countries had the highest ranking.

The Fraser’s PPI Index considers factors such as legal system, taxation system, uncertainty concerning the administration, interpretation and enforcement of existing regulations.

It also considers uncertainty concerning environment regulations, trade barriers, political stability and corruption among other factors.

Africa as a continent was also reported to have dropped for the fifth year as most nations within the continent aim to reform their respective mining industries.

Market watchers Tetrad Securities have warned against brushing this poor performance aside since mining is a critical contributor to the country’s coffers.

 “The drop in Zimbabwe’s ranking on policy attractiveness need not be underestimated particularly as the mining sector is the key contributor. In 2012 the mining sector contributed an estimated 16 percent of the country’s GDP.

“Our view is that with the huge capital requirements for the sector there is need for policymakers to come up with policies that stimulate growth of the industry,” Tetrad said.

Mining companies in Zimbabwe are still waiting for the finalization of their indigenisation proposal by government amid unconfirmed reports that indicate the new government is set to introduce a host of changes to the indigenisation regulations -