In a bid to attract investment for Zimbabwe’s struggling economy, central bank governor John Mangudya, Thursday, announced the country will now allow foreign investors to buy stakes of up to 49 percent in companies listed on its stock exchange.
“We have … increased the threshold of foreign investors on the stock exchange from 40 percent to 49 percent in line with the indigenisation and economic empowerment policy,” Reuters quoted Mangudya to have said in a speech.
Zimbabwe’s policy of not allowing foreign investors to hold more than 40 percent shareholding has for years blocked out investments that could have helped to improve the country’s economic situation. The southern African country had gone into recession between 1999 – 2008, which contracted its economy by half. But with drought and slump in commodities prices compounding Zimbabwe’s economic woes, efforts are in top gear to reposition the country. President Robert Mugabe has not been in good terms with international lenders for years, with one of his cohorts, last September, lashing out at the International Monetary Fund. Now, the president wants ties with international lenders strengthened to save Zimbabwe.
In furtherance of efforts to save the economy, Central bank governor, Mangudya has asked that an Economic Crimes Court be created in the country. He noted that Zimbabwean companies and individuals had illegally transferred $1.884 billion in 2015. He blamed this on lax foreign exchange controls, which has been so since the country abandoned its currency in 2009. The Reserve Bank of Zimbabwe (RBZ) last year announced that President Robert Mugabe’s government had decided to legally end the local dollar after it was ruined by hyperinflation, which hit 500 billion percent in 2008. It had since adopted foreign currencies.
As part of efforts to curb the illegal transfers, Mangudya ordered that all investments by Zimbabweans abroad be approved by the RBZ before they would be allowed to go through, as most of the illegality so far have been through non-remittance of export earnings, unapproved foreign investments, smuggling, among others.
Zimbabwe’s slow growth will continue in 2016, according to the World Bank. The forecast is 1.5 percent, lower than government projection. What the country needs now is access to finance to boost economic growth. It has, therefore, agreed to clear arrears to international lenders so as to be able to access new loans.
The southern African country currently owes multilateral lenders about $7.1 billion and its total debt stands at about $10 billion.
The country also needs assistance to feed nearly 2 million people in need of emergency food.