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Unclear property rights rules scare away investors
Felix Njini, The Financial Gazette
January 13, 2005

LACK of clearly defined property rights and moves by the government to nationalise Zimbabwe’s wealth continue to cause unease among foreign investors, a study by a United States think-tank, Heritage Foundation, says.

Heritage says the government’s empowerment policies remained an uncomfortable hurdle for prospective foreign investors.

The Foundation’s annual index of economic freedom indicates that there was a growing hostility toward foreign investment, with priority being given to economic nationalisation over competitiveness.

This, according to Heritage had led to a rise in cronyism and corruption in both the government and private sectors.

Lack of rule of law and campaign of violence and intimidation against the judiciary since 2000 have also been causing shivers among international investors.

The government has steadfastly defended its empowerment methods, saying it was correcting sharp economic disparities caused by discriminatory colonial policies pursued for many years by minority white governments.

The Zimbabwean government has been accused of orchestrating a campaign of violence and intimidation against the judiciary since June 2000 "in an attempt not to waste time and money in disputes with farmers whose land have been seized, regardless of what legal documents they had".

Despite encouraging foreign investment of up to 100 percent in high-priority projects, the government has often later pressed for an eventual majority ownership of the business by Zimbabweans.

Heritage said businesses face considerable impediments in Zimbabwe’s investment-starved economy.

"The bureaucracy is extremely arbitrary and not transparent. Many bureaucratic functions in this heavily controlled economy are less than fully transparent and can by no means be considered streamlined.

"Corruption within the regulatory system is increasingly worrisome," the foundation said, adding endemic graft was hindering economic development.

The foundation said "disastrous economic policies, including expropriation of land and businesses, excessive government spending, and government-sanctioned violence" discouraged foreign investment, hindering economic production and led to high unemployment.

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