Country remains High-Risk Destination for Investors and International Companies

Zimbabwe has been ranked 31st out of 53 countries across Africa in BMI Research’s latest operational risk index. According to BMI Research, a Fitch Group company, the highest risk in Zimbabwe is related to trade and investment. “The combination of endemic corruption, weak rule of law, restrictions of foreign investment and a lack of its own currency serve to make Zimbabwe an unattractive operating environment for foreign firms,” said the research firm. “Corruption in particular poses a major obstacle to foreign investment and participation in the economy by lowering the accountability and impartiality of the judicial system,” said BMI, adding that this has adverse consequences for important procedures such as the filing and paying of taxes, the resolution of contractual disputes and the registration of property.

The research firm also confirmed the Harare government’s long-held view that sanctions are hurting the economy. “The targeted sanctions imposed on Zimbabwe by the US, EU and Australia pose a legal barrier to multinationals based in Western states from investing in Zimbabwe,” said BMI. “However, we expect these to be fully lifted in the medium term given the implementation of positive political reforms.”

Zimbabwe also scored low at 33.6 out of 100 in terms of logistics risk. “With a lack of access to maritime trade flows and the added stress placed on its ailing road and rail network, Zimbabwe’s reliance on its neighbouring countries for efficient trade poses a threat to investors. “Additionally, the movement of goods is hampered by lengthy bureaucracy and relatively expensive trade procedures, creating additional costs for businesses.” MBI also gave Zimbabwe a low score in terms of labour market risk, saying the country’s labour market cannot compete with its regional peers owing to low levels of productivity relative to high minimum wage requirements, and grave public health issues that increase costs for businesses operating in the country.

Zimbabwe however does not pose much risk in terms of crime and security, with BMI giving it a score of 45.5 out of 100. The research firm however said current succession battles within the ruling ZANU-PF party have contributed negatively to political stability in Zimbabwe. Overall Zimbabwe received a score of 34.4 out of 100 for Operational Risk, ranking 27th out of 48 states in sub-Saharan Africa, ahead of Mozambique but behind Kenya, Zambia, Namibia and neighbouring South Africa.

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