ZIMBABWE’S ongoing political crisis — occasioned by the disputed July 30 presidential poll — is damaging the local economy’s revival prospects, as investors adopt a wait-and-see approach before taking firm positions on the country.
This comes as President-elect Emmerson Mnangagwa has called on Zimbabweans to move on and analysts say potential investors were adopting a cautious approach towards Harare in the aftermath of deadly violence, which rocked the country two weeks ago.
Economist Eddie Cross said the country’s stuttering economy was set to remain subdued until a resolution of the country’s political crisis.
“Businesses never like uncertainty and until the position of the president is resolved, we will see reduced business activity across all sectors,” he warned.
Chris Mugaga, the Zimbabwe National Chamber of Commerce chief executive, concurred saying the political impasse was “not good” for the country.
“It may prove detrimental to the country’s investment prospects and this would just be ironic given that they (politicians) also say they want investment for the country,” he said.
Another economist, John Robertson, said it was imperative that Harare resolved its political disputes quickly, as investors were getting weary of the on-going uncertainty.
“Investors expected that the ‘open for business’ mantra would happen immediately after the elections, but this has not happened. “We have seen soldiers killing civilians and an opposition that is determined to drag this thing out (political stalemate) for as long as they can,” he said, adding that “this is spooking investors”. “Over the seven months that Mnangagwa fought for legitimacy and recognition from the outside world, we saw renewed interest in Zimbabwe as an investment destination, but now this confusion is definitely putting investors off,” Robertson said.
Sifelani Jabangwe, the Confederation of Zimbabwe Industries (CZI) president, also said that the country’s continuing problems and misery were likely to affect both investor confidence and sentiment locally and internationally.
“We could have a bit of a challenge because investors and business would have wanted a smoother electoral process.
“All the things that happened were part of the electoral process, but this needs to be communicated properly to investors,” he said.
United Refineries Limited chief executive Busisa Moyo — also a former CZI boss — said all was not lost depending on what happens from now onwards.
“I believe investors are still keen on Zimbabwe as they need an alternative to South Africa in the region. I don’t think the MDC Alliance’s court case itself is a big issue … from what we are hearing investors are more interested in how the country handles the process from this point onwards,” he said.
“Institutions like the judiciary are key and are seen as an indicator or pointer on the prospects of accessing sound commercial legal redress by investors once they bring their funds into Zimbabwe,” Moyo said.
“In addition to that, our ability to maintain calm, peace, order and restraint as a nation will also be critical as the spotlight is still on Zimbabwe for all intents and purposes,” he added.
Meanwhile, European Union ambassador to Zimbabwe Philippe Van Damme has said Harare’s political environment must change for the country to realise its investment potential.
“Economic and political governance has to improve (for Zimbabwe) to take full advantage of these privileged trading conditions,” he said on his Twitter account.
Following the violence which rocked Zimbabwe on August 1, the South African-based investment mobilisation organisation — Zim Business Forum Link — called on its members to halt investments to the country in the short to medium.
“We do suspend all investment deals currently underway destined for Zimbabwe till further notice. We are not processing any business plans or packages for Zimbabwe,” it said.
And in another telling sign of tough times ahead for Zimbabwe, the Financial Times of London said last week that multinational companies, which had planned fact-finding missions to Harare after the elections, were postponing them.
“It has come to nought as fears rise over basic stability, especially the seemingly out of control security forces,” the respected publication said.
“Ever since soldiers fired at demonstrators claiming the July 30 poll was rigged … Mnangagwa has moved further away from reopening Zimbabwe to the world … The crackdown has exposed the fundamental flaw in any plan by Mr Mnangagwa’s ruling Zanu-PF to reopen the country to investors,” it added.
Zimbabwe desperately needs both foreign direct investment and foreign exchange.
This comes as America has dealt a major blow to the country’s economic recovery prospects after recently enacting the Zimbabwe Democracy and Economic Recovery Amendment.
The law, which was initially crafted to punish ousted former president Robert Mugabe’s rogue regime, has set out stringent new parameters to be taken by the Zimbabwean government before the normalisation of relations with Washington.
Fingaz