eBusiness Weekly
Enacy Mapakame
The country’s largest business lobby group, the Confederation of Zimbabwe Industries (CZI), says the country’s investment prospects for 2022 are bright, as confidence in the country continues to grow.
This is despite some sticky issues such as repatriation of dividends that have among others challenges deterred investments.
There are high interests shown in the mining sector, which is one of the major sectors expected to drive economic growth. Already, the mining sector is projected to grow by 8 percent and more investments in the sector this year is expected to further boost activity, buoy the economy in general, which is expected to grow by 5,5 percent this year.
“Zimbabwe’s investment outlook for 2022 remains highly promising, despite the lack of closure on key aspects such as land tenure, foreign exchange market regulations and bottlenecks on the repatriation of dividends or movement of capital out of the country,” said CZI in their Annual Economic and Business Outlook report.
“Foreign investments into the country are still biased towards the mining sector and the trend will likely continue in 2022 and beyond,” said CZI.
Recently, two Chinese entities have made forays to secure Lithium exports from Zimbabwe through buying lithium mines locally.
The Zhejiang Huayou Cobalt company procured Prospect Resources’ Arcadia Lithium Mine for US$422 million while Sinomine will buy Bikita Minerals for US$180 million.
This comes as the country is endowed with abundant reserves of Lithium, which is a key component of electric vehicle batteries. EVs are the vehicles of the future green revolution. The global prices of commodities are expected to remain bullish this year.
According to CZI, the bullish prices for platinum, gold, lithium and nickel will drive investor interest in mining as the commodities are export oriented.
Besides the mining sector, other sectors of the economy such as retail and wholesale, manufacturing, tourism, petroleum retailing, and real estate have witnessed significant local and foreign investment as well.
In 2020, the country received US$194 million and the 2021 figure is expected to remain in the same region. The figure is, however, a 74 percent decline from the US$745 million that was recorded in 2018.
The mining sector specifically recorded a 25 percent growth year on year in export receipts to US$5 billion in 2021 supported by firm international prices and a raft of measures taken towards turning the sector into a US$12 billion industry by 2023.
Accounting for 83 percent of aggregate exports in 2021, growth is estimated to reach 3,4 percent from a Covid 19 induced negative growth of 9 percent in 2020.
The introduction of the export initiative scheme addressing incremental retention ratios and exemptions from export surrender requirements and rolling back of presumptive tax on small scale miners saw gold production yield rise 55 percent year on year compared to 2020 despite heavy rains slowing operations in the first quarter.
First quarter volumes for PGM’s came in relatively solid on account of construction works still to come to maturity, receipts for the sub-sector were projected at US$2,37 billion, +20 percent variance year on year driven by strong global prices.
“Optimism for 2022 in the sector remains encouraged by ongoing developments to increase capacity, and outlook on commodity prices. The sector appears to be attracting improved funding at this point with a key highlight being Zimplats commitment to invest US$1,8 billion,” said stockbrokers IH Securities in their Zimbabwe 2022 Equity Strategy Report.
The brokerage firm however points policy shifts as the key downside risks for the sector.
