Call to improve country risk ranking

ZIMBABWEAN authorities should consider taking up critical measures to diminish the country risk rating, which has precluded the flow of new capital for investment. 
The country's latest Competitiveness and Doing Business rankings are not conducive for investment.
According to the 2010 to 2011 World Bank Doing Business Report the country is ranked 157 out of 183, while in the Competitiveness Report of the same period Zimbabwe has been ranked 130 out of 139 countries.
According to a position paper by the Zimbabwe National Chamber of Commerce, enhancement of Zimbabwe's risk profile will result in the local industry having improved access to external forms of credit.
"Capital is timid, thus more efforts must be put to mobilise foreign direct investments.
"The idea of issuing Diaspora bonds to inject money into the economy is sustainable. However, as long as perceptions of environment and policy uncertainty persist, there will still be market resistance," said ZNCC.
The country presently faces a debt overhang to the extent that its debt accumulation has exceeded its capacity to reimburse, which is largely a result of the cost of debt combined with a decline in the national Gross Domestic Product over the past decade. 
This has resulted in the loss of the country's creditworthiness, hence limited access to funding from the multilateral institutions.
In view of the adoption of the multi-currency system early in 2009 Zimbabwe has been facing liquidity constraints, a challenge that has been worsened by the fact that the country does not print its own money, low commercial bank deposits, limited foreign direct investment inflows as well as poor generation of export capital.
Nonetheless, Zimbabwe has made some significant strides in terms of its foreign direct investment performance between 2007 and 2009, according to the latest United Nations Conference on Trade and Development investment report.
According to the Unctad's Inward FDI Performance Index, Zimbabwe improved its country ranking from 121 in 2007 to 117 in 2008, and 101 last year, which is indicative of positive adjustments in the country.
The Government has from last year been implementing a trade liberalisation programme that has largely resulted in the elimination of import licensing restrictions, and seeks to make foreign currency readily available through the banking and auction systems.
With respect to minimising the effects of prevailing market illiquidity for the local industry, the Government has undertaken a number of initiatives. These includes establishment of the Zimbabwe Economic and Trade Revival Facility that is co-funded by the Government and the Africa Export and Import Bank, the Botswana line of credit and the Common Market of Southern Africa-South Africa line of credit.
The business representative body noted the significance of Zimbabwe's Diaspora community in improving economic fundamentals in the country.
"Our citizens in the Diaspora also have to appreciate that they have an obligation to create jobs for their families, so as to reduce the heavy reliance on remittances.
"We therefore encourage our stakeholders to take the risk like we have done, and we will support them in safeguarding their investment," the organisation has said.
The chamber has called on the multilateral institutions to ease on their debt relief requirements for Zimbabwe, and has said that it could lobby the institutions for debt relief.
"Our partners abroad, especially the International Monetary Fund, World Bank, African Development Bank, and the European Union have to accept that no country has ever assumed a position of perfect stability. We know they invest in countries that are even at war, so Zimbabwe could not be worse off.
"Whilst we are aware that debt assumption needs parliamentary approval first, we want to lobby for debt forgiveness, even if it means a modified Highly Indebted Poor Country (HIPC) status, so that a robust debt management framework is adopted to attract money from multilateral partners," said ZNCC.
The HIPC are a group of 40 least developed countries with high levels of poverty and debt overhang which are eligible for special assistance from the IMF and the World Bank, and although Zimbabwe meets the criteria for debt relief, the concept has not received favourable consideration from Zimbabwe authorities.