Mining, energy lead in FDI attraction

The Ministry of Mines and Mining Development gazetted SI 57 of 2023, which is aimed at encouraging local processing of minerals.

The Zimbabwe Investment and Development Agency (Zida), which is responsible for attracting, promoting and facilitating investments into the country, recently released its 2023 second quarter performance report.

Among other sectors, the mining, construction and energy industries are attracting domestic and foreign capital, according to the report.

With the ongoing conflict in Europe and rising inflation, capital remains timid as global foreign direct investment (FDI) took a 31% knock during the second quarter.

Inflows into Zimbabwe were not spared. Actual investment is defined in this case as contributions already made by shareholders in the form of cash or equipment, as opposed to projected investment, which is what the investors would have committed in their applications.

Of all investment licences issued by Zida for the first half, 56% were awarded to Chinese investors, whilst 8% went to Indian investors.

Domestic investors made up 6% of the total.

South African, British and Pakistani investors amongst others also received investment licences.

 The investment licences issued in the first half of this year doubled what Zida issued in the first half of 2022.

Efforts to increase domestic direct investment are also underway and expected to start reaping results in the third quarter.

Actual investments in the second quarter of 2023 amounted to US$688,29 million, compared to the projected US$1 075.

The first quarter witnessed investments of US$154,49 million, putting the total for the first six months to over US$840 million.

However, compared to the first half of 2022 investment decreased by 40%.

Demand for energy has increased significantly locally and globally over the past years.

This has attracted investors to explore for opportunities in the country.

According to the Zida report, 68% of the projected value for licences issued in the second quarter was in the energy sector.

Zida said Zhongjin Heli Energy (Pvt) proposed to invest US$400 million towards coal mining and thermal power generation in Matabeleland North.

Earlier in the year we witnessed the commissioning of Hwange Units 7& 8 power station expansion, which is already feeding into the national grid. A total amount of US$723,91 million was projected in the energy sector for the second quarter of 2023.

The mining sector received 39% of all investment licences issued in the first half. Early in the year, the Ministry of Mines and Mining Development gazetted SI 57 of 2023, which is aimed at encouraging local processing of minerals, as this value-addition process improves the value of exports and employment opportunities for locals.

There has been a lithium rush over the past few years, and Zimbabwe is among countries with high lithium deposits.

The move via the Base Minerals Export Control Amendment, of banning exports of unprocessed lithium also aims at increasing beneficiation.

During the first half of the year, five submissions for Public Private Partnerships (PPP) proposals were made, with four of them getting the green light to continue with feasibility studies.

Among the projects was the US$150 million Old Gwanda – Bulawayo road rehabilitation programme in the Matabeleland South Province.

There was also a copper mining project at Sanyati Mine in Mashonaland West Province, which is projected to cost US$22,9 million.

It is currently at feasibility study stage.

Zida rejected a proposal from Flowtite, a South African company that wanted to partner with the Zimbabwe National Water Authority (ZINWA) for manufacturing Glass Reinforced Polyester pipes in Zimbabwe.

The estimated project value was US$16,5 million.

However, Flowtite was allowed to come into the country and carry out the project without a partnership with ZINWA.

Other key projects currently underway include feasibility studies for a PPP between Telone Wireless and a party to be identified after a bidding process, to do a Build, Lease and Transfer model.

The Zimbabwean government is also engaging Knighthood Global Limited and is currently at the feasibility stage to create an Aviation Group.

Zimbabwe continues to offer exciting opportunities to both foreign and domestic investors.

Efforts to make the investment environment as friendly as possible are underway, according to authorities.

However, more is still expected, especially in sectors like manufacturing and agriculture, to implement latest technologies and value add.

Hozheri is an investment analyst with an interest in sharing opinions on capital markets performance, the economy and international trade, among other areas. He holds a B. Com in Finance and is progressing well with the CFA programme. — 0784 707 653 and Rufaro Hozheri is his username for all social media platforms.

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