Maravi

Report links corruption to low foreign investment

Report links corruption to low foreign investment
By Ndinawe Simpelwe
Fri 21 Jan. 2011, 04:00 CAT

CORRUPTION and bureaucracy are some of the inhibiting factors affecting foreign investment in Zambia.

According to the Bank of Zambia (BoZ) 2010 preliminary report on the Foreign Private Investment and Investor Perception in Zambia, corruption, bureaucracy, electricity supply efficiency and cost continued to affect foreign investor decisions.

The report indicated that Zambia received lower amounts of foreign private investment in 2009 as compared to 2007 amounting to US$935.4 million in 2009 from US$1,932.8 million recorded in 2007.

The reduction in the inflow of foreign private investment was also attributed to the global economic crisis as investor profits and sales fell substantially.

The report showed that investors took measures to mitigate the effects of the global economic crisis by exploring new markets, downsizing the labour force and suspending expansionary projects.

The report recommended that the government accurately and consistently capture and monitor foreign private investment in order to maintain macroeconomic stability.

And BoZ governor Dr Caleb Fundanga said despite recording a decline in the foreign private investment, the country recorded an increase in new equity investment inflows.

“New equity investment inflows in Zambia surged to US$419.2 million in 2009 from US$131.6 million recorded in 2007. The substantial increase in new equity investments, despite the effects of the global financial and economic crisis, demonstrates how favourable the Zambian investment climate is in attracting foreign investment,” said Dr Fundanga during the launch.

He was also happy that the government’s diversification efforts were yielding results.

“The survey shows that the concentration of foreign direct investment in the mining sector is reducing as evidenced by substantial FDI in flows to other sectors such as manufacturing, wholesale and retail trade and the tourism sector in 2009,” he said.

Dr Fundanga said evidence from south east Asia and the recent global financial and economic crises showed that foreign private capital if not properly monitored and managed could result in financial instability.

“In light of this the results of the Foreign Private Investment and Investor Perception Survey are important and intended to assist the government to effectively monitor and manage inflows,” Dr Fundanga said.

He called for regular surveys to be conducted in order for the government to have adequate information on a regular basis.

“Zambia has adequate technical capacity to collect, analyse and disseminate data and information on foreign private investment. It has, however, lagged behind in terms of frequency of these surveys compared with some other countries in the region,” he said.

Dr Fundanga said while Zambia was carrying out the third survey, countries like Uganda, Tanzania and Malawi were in their fifth, eighth, and fourth phases respectively.

Labels: BOZ, CALEB FUNDANGA, CORRUPTION, FDI

posted by MrK @ 4:56 AM