Potential Danish investors hesitant
Saturday, 17 April 2010 17:13
THE Industrialisation Fund for Developing Countries (IFU), a Danish development financial institution, is prepared to invest in Zimbabwe’s tourism sector amongst others but is holding out until there is political and
economic certainty. IFU’s Kim Gredsted who heads the southern African regional office and senior investment manager Hans Jørgen Nyegaard were in the country last week to attend a board meeting and an AGM for household and commercial refrigeration manufacturer, Metafolds.
IFU has a 24% stake in Metafolds.
The duo also touched base with pork processor, Colcom, where IFU has a 1% shareholding. In an interview with Standardbusiness, the duo said IFU would want to invest in Zimbabwe but they wanted to understand the business environment in the country so that they can advise Danish companies.
“The Danes would very much want to do investments here but want stability and less commercial and political uncertainty,” Gredsted said.
“If you play a game of soccer, if you don’t know what the rules are, then it is difficult to play the game. We would like to know the rules of the game throughout the match.”
Nyegaard chipped in: “. it’s necessary that we know the rules so we can tell Danish investors those are the rules in Zimbabwe, if they like them then that’s fine, if they don’t like them then don’t invest.” IFU invests in conjunction with Danish firms.
Investors’ fears have been heightening following the promulgation of the Indigenisation and Economic Empowerment regulations in January dictating that foreign owned companies with a value of US$500 000 should dispose 51% shareholding to locals after five years.
The move unnerved investors with Norwegian development fund, Norfund, calling off its proposed US$1, 5 million investments into an agricultural financing company in Zimbabwe.
Nyegaard said investments into the hospitality sector could be directed towards the refurbishment of existing hotels with a Danish company as managers.
The tourism sector has been crying out for long term funding to revive the tourism product. Asked whether IFU would capitalise on the under-funding of the hospitality industry, Nyegaard said: “Any industry in Zimbabwe is lacking capital.
“Those are areas that you have a competitive advantage, you have the climate for tourism, you have tourism attractions, if could also be a business hotel.”
IFU investments are driven by the interest from Danish companies, the two officials said, but added that the interest on Zimbabwe was limited.
On empowerment regulations, the officials said, “We will dig into that if we have somebody coming to us and asking if we will invest together with them in Zimbabwe then we will update ourselves (about the regulations)”.
Eligible host countries of IFU investments must be on the Organisation for Economic Co-operation and Development (OECD) Development Assistance Committee’s list of development aid recipients, and 2008 GNI (gross national income) per capita income must not exceed USD 3,084.
A general exception for the limit is given for Botswana, Namibia and South Africa, IFU said on its website.
Azerbaijan, El Salvador, Angola, Armenia, Jordan and Cape Verde now have a GNI per capita income above the limit, but are still eligible for IFU investments in 2010, it said.
BY NDAMU SANDU