An Evaluation of The Affinity For Foreign Direct Investment (FDI) And Willingness To Dilute Shareholding Among Zimbabwean Companies

Abstract

This research seeks to evaluate the level of appetite for foreign direct investments or other forms of financial interventions among Zimbabwean (local) companies to revive industry operations, to evaluate the level of preparedness and willingness of local business owners to give up shareholding in lieu of working capital and capital expenditure investment by foreign investors, to evaluate the appreciation of the positive effects of creating synergies with foreign companies which have the requisite financial capacity for economic revival and sustainable growth, to explore the potential benefits to companies and the economy at large of the synergies that can be forged with foreign investors, and to identify possible interventions for attracting FDI as a measure to recapitalize the ailing local industry. Literature on foreign direct investment, the benefits of foreign direct investments and trends on foreign direct investment inflows into the Zimbabwean economy is reviewed with a view to forming a basis against which the research findings are analyzed. The researchers carried out a cross sectional survey that focused on the manufacturing, motoring, engineering, energy, hospitality and tourism companies in Bulawayo, Zimbabwe with a view to evaluating their appreciation of the concept of bringing in foreign investors who have the requisite capital they need for economic revival. The research findings were analyzed and conclusions were drawn, which formed the basis for making recommendations to both government and industry on policy direction for improving the attractiveness of the Zimbabwean economy for foreign direct investment. While respondents agreed that they have need for capital injection for working capital and capital expenditure, the bulk of them (70%) did not show willingness to give up shareholding in exchange for capital injection through foreign direct investment. Instead, they recommended other policy measures and changes to be implemented by government, which they envisaged to change their fortunes in economic turnaround. Some of these recommendations have been implemented before without yielding much positive results. Based on the trends in other developing countries, where foreign direct investment has yielded positive results towards sustainable economic growth as evidenced by the literature, the researchers recommend that the government through its various ministries and the business association educate the business community on the benefits of foreign direct investment to their organizations and to the economy in general. It is also the researchers’ recommendation that the government considers reviewing economic policies so that the economic environment is more conducive for foreign investors to bring in the capital required in Zimbabwe for sustainable economic growth and development.