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Mining, agric still offer lots of opportunities

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ZIMBABWE’S traditional economic performers — mining and agriculture — will continue presenting huge opportunities for investment and growth in the country due to support the sectors get from the government, DLA Piper Africa has said.

DUMISANI NYONI

In its latest 2022 report, the Swiss verein firm said mining and agriculture will continue offering growth opportunities for the country as these sectors are supported by government policies with tax concessions and favourable exchange control treatment being granted to qualifying investors.

“Zimbabwe’s traditional economic performers like mining and agriculture will continue to present opportunities for investment and growth. These sectors are supported by government policies with tax concessions and favourable exchange control treatment being granted to qualifying investors,” the report reads in part.

The mining sector contributes about 60% to the country’s annual export receipts and at least 14% to gross domestic product (GDP), while agriculture contributes 40% of total export earnings and approximately 17% to GDP.

Agriculture is projected to grow by 5.1% this year while mining is expected to grow by 8%.

Zimbabwe’s main exports are minerals, soft commodities and agricultural produce. The country has large reserves of chromite, coal, gold and iron ore, among others. It is also one of the world’s largest growers of tobacco.

In addition to the mining and agriculture sectors, DLA Piper Africa said investment in infrastructure development would grow on the back of a massive infrastructure deficit in the country.

“The government, facing this infrastructure gap, has become more amenable to private-public partnerships in infrastructure projects. These arrangements allow investors to benefit from implementing projects through a government-backed framework,” it said.

In terms of investment opportunities, DLA Piper Africa said Zimbabwe has limited access to finance from international financial institutions, and this provides an opportunity for other types of financiers and lenders to fill the gap depending on a particular investor’s investment profile and risk appetite.

The organisation said because of the country’s foreign currency shortages, there is significant focus on export-oriented and foreign currency-generating activities. This allows investors, businesses and the government to retain value and meet the country’s forex needs.

Due to the foreign currency earning potential, DLA Piper Africa said investment will grow in these sectors to meet the capitalisation requirements of businesses operating in them.

“These strategic sectors are also typically supported through investor-friendly policies and incentives that aim to encourage investment, with the ultimate aim of achieving the government’s objective of making Zimbabwe a net exporter by 2030,” it said.

“As the consistency and implementation of these policies improve, there will be increased investment and financial movement in these sectors.”

In the last two decades, Zimbabwe has experienced unprecedented economic decline, hyperinflation and international isolation, particularly with respect to accessing lines of credit.

This has affected the general business mood in Zimbabwe as investors have been reluctant to invest in the country and lenders have been reluctant to lend.

Looking ahead, however, DLA Piper Africa said there is cautious optimism regarding the country’s general business trajectory in the next 18 months.

It said this can be viewed from two angles: the cautious angle observes whether or not government policies aimed at resolving the macro-economic issues such as curbing high inflation and foreign currency shortages will succeed; whereas the optimistic angle looks at recent infrastructure developments (the modernisation of the Beitbridge Border Post, for example) and more investor-friendly policies by the government and recognises that there are huge opportunities waiting to be explored.

“The general mood seems to be one that recognises that if the macro-economic shortcomings can be addressed, even if just slightly, businesses, both local and foreign, will have a platform on which to meaningfully develop and grow,” it said.

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