The Impact of government policies and initiatives on the FDI Performance in the manufacturing sector: The case of Zimbabwe (2009-2018).

Abstract

The study evaluated the impact of selected government strategies on Foreign Direct Investment (FDI) in the manufacturing sector. The ZIMASSET, SI64 and Ease of doing business were the strategies that were measured against FDI and manufacturing sector. The manufacturing sector has been underperforming since early 2000s which contributed to a sharp decline in FDI. The Government strategies instituted, fell short of attracting FDI inflows and the manufacturing activities have remained low as evidenced by a rate of 10% industrial capacity utilization. A survey was conducted in the manufacturing sector using a structured questionnaire. Purely quantitative data collection methods were used. A sample of 60 manufacturing companies and a total of 100 managers were selected using random and convenience sampling methods. A response rate of 74% was achieved. The data was analyzed using SPSS version 2.0 to produce the descriptive and inferential statistics. The findings revealed that most of the mean responses ranged from 3-3.8 which indicated noncommittal responses and partial agreement to the impact of selected strategies to FDI and manufacturing performance. The research concluded that the impact of SI64 only benefited some of manufacturing companies who had access to finance and cheaper raw materials. ZIMASSET has contributed in promoting local people to acquire ownership of businesses. The study established that ease of doing business significantly impacted on the manufacturing sector and FDI, however, the majority of the manufacturing companies did not effectively experience the benefits of the ease of doing business since access to funds was not easy to some who failed to meet the expected conditions, due to currency problems in Zimbabwe, operating costs were still higher than expected. The study recommended that the government strategies could be more effective if the manufacturing sector itself is readily prepared, in terms of its human resources, Zimbabwe should continue to build confidence in the manufacturing sector through coming up with policies that directly address the challenges that are faced. The SI 64 must be maintained and the government must ensure that there are supportive structures to enhance its effectiveness.