The Zimbabwe Investment Authority (ZIA) says the country recorded a sharp fall in approved new investments to $930-million in 2012, from $6.6-billion in 2011, owing to economic uncertainty arising from the indigenisation programme and prevailing international investor perceptions that the country remains a high-risk investment destination.

Of the $930-million approved in 2012, $688-million was earmarked for the mining sector, which maintained its position as the leading investment category.

Analysts blame the manner in which the indigenisation programme is being implemented, as well as the elections planned for later this year, as the factors forcing international investors to adopt a wait-and-see attitude.

Statistics released by the ZIA show that the country approved 172 projects in 2012, a decline from the 227 projects approved in 2011.

The biggest drop was recorded in the mining sector, where the value of approved projects fell from $3.6-billion in 2011 to $688-million in 2012. The value of approved investments in the tourism sector fell sharply from $1.5-billion in 2011 to only $1-million in 2012.

The value of approved investments in the manufacturing sector continued to slide – from $670-million in 2011 to only $58-million in 2012.

Approved investments in the agriculture sector fell from $445-million in 2011 to $21-million, while the services sector witnessed a slump from $128-million in 2011 to $41-million last year.

The ZIA notes that most of the approved projects have yet to be implemented because investors need time to raise the capital to fund their implementation.

According to the Zimbabwe Investment Act, investors are allowed up to two years to implement the approved projects, failing which they are required to inform the authority of the cause of the delay and show how they intend to continue implementing the project.

Economic analyst Eric Bloch says the sharp fall in potential investment inflows was caused by a ‘wait and see’ attitude adopted by foreign investors who fear that they may lose their investments because of the country’s politically charged indigenisation and economic empowerment programme.

In terms of the indigenisation law, locals must own 51% of all businesses in which foreigners have a stake.

Economic Planning and Investment Promotion Minister Tapiwa Mashakada says government is aware that, because of its contentious nature, the indigenisation policy is scaring away potential investors. He says Cabinet has already approved amendments to harmonise the conflicting sections of the indigenisation and investment laws.