The ManicaPost
Kudzanai Gerede Business Correspondent
Analysts say foreign direct investment, particularly in resource-centred sectors of mining and manufacturing, lacks the key aspect of technology transfer, an instrument that ensures sustainability of the investment that will benefit the economy long after the investor is gone.
A cited case in particular has been the recent disengagement of the State with the Chinese investors at Chiadzwa, whose departure after almost seven years of operations, left the diamond sector in dire need of advanced equipment for the newly formed state company, Zimbabwe Consolidated Diamond Company, to resume operations.
The technological gap remains a major albatross not only in the extractive sector but across the country’s productive sectors of agriculture and manufacturing at a time the region is in re-industrialisation mode and experts say the fastest way to mitigate the challenge is to tie FDI to technology transfer.
While the recently proclaimed Special Economic Zones and Indigenisation law speaks to the foreign investor on issues of capital injection and equity respectively, the same should have components of sustainable partnerships for technology transfer to emerging local businesses.
United Nations Development Programme (UNDP) senior economic advisor Mr Amarakoon Bandara told Post Business that failure to effectively negotiate sustainable deals and clarifying the roles of foreign investors’ participation in the economy can lead to the country being ripped off of its diverse natural resources without benefiting the locals.
He argues that the type of investment that has been trickling into the country is capital-centred and is largely spent on purchases on raw materials and little is channelled towards infrastructure and latest technologies.
“What Zimbabwe has are resources that can make it the highest income earner per capita in the region. It only needs technology attached to FDI to sustain its emerging economic players. Sustainable investment is a matter of partnerships along with domestic counterparts, that’s how you transfer technology to the local economy for continuity and growth even after the investor is gone.
“We have to think participation of foreigners as partners not negotiate deals that will only lead to the country’s resources being exploited. It can happen if the systems and accountability mechanisms are not in place. Foreigners can rip you off if your systems are not in place,” he said.
Mr Bandara said the model has been used by many emerging Asian economies such as Singapore, India and Thailand in order for their small and medium enterprises to gain technological expertise and remain competitive.
In Zimbabwe, SMEs – particularly in mining – continue to operate inefficiently owing to obsolete equipment despite improved production output, with figures released this week by Fidelity Printers showing that small-scale miners have surpassed large mining firms on gold deliveries this year.
This, according to Mr Bandara, shows the potential the country has to self-sustain without reliance on international credit instruments if small players across the entire economic spectrum gain requisite technology from foreign investor in big companies to harness the abundant resource base at the country’s disposal.
