Harare - XINHUA
Foreign investors investing in joint ventures that require huge capital injection will get tax incentives from the Zimbabwean government, a top official said. Deputy Finance and Economic Development Minister Samuel Undenge was quoted by state media as saying that it was necessary to offer incentives in a bid to attract foreign investment. Liquidity constraints have forced the closure of more than 100 firms and loss of more than 10,000 jobs since August 2013, while capacity utilization for most of the survivors has remained at below 40 percent. "We need to lure investors into the country and the only way it can be done is through the creation of an investor-friendly environment," Undenge said. He disclosed that a team of government officials from different ministries were about to identify possible incentives that could be offered. Zimbabwe's economy is mired in entrenched crisis. The World Bank in April downgraded Zimbabwe's economic growth rate projections from 4.2 percent to 3 percent in 2014 due to low investment, weak growth in mining sector and adverse effects from the global economy. It was the lowest growth rate since 2009 when the economy recovered from a decade-old recession. The ruling party has lately softened its stance on an indigenization law which requires foreign companies to sell off 51 percent of shares to locals. The law has been blamed for the poor foreign direct investment inflows as investors sought clarity on how they would be affected. Finance minister Patrick Chinamasa said while the 51 percent threshold would be maintained in the resources sector – mining in particular – the same could not be said about other sectors of the economy, in an apparent softening of position. Zimbabwe's veteran President Robert Mugabe, who inspired the empowerment law, has also sought to assure foreigners that their investments in the country are safe and that the government would not expropriate or nationalize foreign companies under the indigenization law.