GERMAN companies are ready to invest in Zimbabwe, but will only commit themselves to the country when conditions are ripe for investment, The Financial Gazette can reveal.
Firms in the giant European nation used to conduct business with Harare from as early as the 1980s, but took their investments elsewhere in 2002 when the European Union slapped Zimbabwe with restrictive trade measures due to alleged human rights abuses and lack of respect for property rights.
Germany does not have its own trade policy and trade relations between Zimbabwe and Germany are governed by the European Union (EU) — Zimbabwe economic partnership agreement that is in effect.
Georg Schmidt, the Germany Foreign Office Director for Africa, said companies from his country such as Volkswagen, Voith Hydro Holdings, Siemens Healthineers and Airbus have a strong interest to invest in Zimbabwe.
“They know about the potential this country has and the level of education and knowledge Zimbabweans have. There’s something about the Zimbabwean spirit of hard-working and good ethics when you look at how Zimbabweans are performing in regional countries such as Botswana and South Africa,” he said.
Schmidt, however, noted that most German firms, which visited Zimbabwe in February this year, expressed consternation at the country’s legal framework and foreign currency accessibility.
“Given the images of the past where property rights were disregarded by the previous regime, it’s difficult to rebuild confidence,” he said, adding that it was important for government to deal with the past and compensate those who were wronged and clear its external debts.
“There’s a clear understanding that this issue has to be dealt with to clear the path for re-engagement and foreign direct investment,” he added.
At least three delegations of German investors have visited Zimbabwe in the past three years seeking investment opportunities in areas such as energy, information and communication technologies, mining, farming, banking and motor industry, among other sectors.
German ambassador Thorsten Hutter recently noted that the German African Business Association, which represents more than 500 German companies, was worried by the current liquidity crisis in Zimbabwe.
“They need to know whether they are able to bring in money and they want assurances that if they bring in money they can use that money as they wish, and they want to be assured that the currency is transferable,” he said.
“If you set up a company in Zimbabwe you have to capitalise it, for that you have to bring in money. But the company might need to buy machinery and products outside of Zimbabwe. That’s something that all companies are very adamant about. Once they have money in their account they want to be able to use it according to their business needs. This is a very important issue for the Zimbabwe government to address,” Hutter added.
Zimbabwe is experiencing acute foreign currency shortages due to a huge import bill, illicit financial inflows and ballooning government expenditure.
This has resulted in companies buying the United States dollar at a premium on the parallel market to secure raw materials for their operations.