Controls on foreign firms in Zimbabwe will deter investment, businessmen say
With the imposition of tough foreign currency controls in Zimbabwe, businessmen here say the nation has further hurt its ability to attract sizable private foreign investment.
Branches of multinational corporations in Zimbabwe are blocked temporarily from channeling profits back to their home companies and sending dividends to investors.
Understanding that this will deter new investment in their nation, the Zimbabweans have left a deliberate loophole. Any foreign investment made in Zimbabwe since September 1979 is exempted from this moratorium. So H.J. Heinz, for instance, which is probably the only major new foreign firm in Zimbabwe since 1980, will still be able to send dividends abroad.
Government officials, who instituted the measures because of the prolonged drought and world recession, emphasize another positive aspect of the new controls: their treatment of the so-called ''blocked funds,'' estimated at $360 million to $400 million. These funds built up mainly during an earlier period when British and American companies were unable to transfer profits and dividends back to their headquarters.
Finance Minister Bernard Chidzero has placed an embargo on the remittance of interest and dividends from such blocked funds, estimated at $36 million annually. But he has opened a rather lengthy tunnel through which blocked funds can eventually be repatriated.
US companies with such blocked funds can now invest them in new 20-year Zimbabwe government external bonds carrying interest at the admittedly derisory rate of 4 percent annually. During the next 10 years, the companies will be able to remit the interest on these bonds. From the 11th year onward, they will be allowed to progressively withdraw their capital. Alternatively, they can reinvest in higher-return assets in the country, but they will not be allowed to remit funds for the time being.
The other major exchange control announced recently is the state's acquisition of the ''pool'' of domestically owned foreign securities valued at $ 180 million. This pool is to be sold off to earn foreign currency for Zimbabwe. This move is, of course, unpopular with the country's remaining 125,000 whites, who own the bulk of the securities. A significant proportion of the securities is also owned by former Rhodesian whites now living abroad.