Global experts tout Zimbabwe’s economic recovery

CAPE TOWN — Two globally respected legal arbitrators and southern African investment experts had Davos audiences sitting up and listening this week as they unpacked the revival prospects for Zimbabwe. What they outlined, with hard evidence and some caveats about untangling more of the stifling laws that Mugabe enacted during his 37-year reign, will accelerate a budding economic turnaround. Devoid of rhetoric, their presentations outlined how a country once considered the breadbasket of Africa, is on the up and up, in spite of, or perhaps because of, its bloodless military coup. President Mnangagwa has reversed debilitating, arbitrary and tragic land evictions laws, instituted compensation, scrapped corrupt indigenisation laws and given foreign companies protection. The expert trio told delegates at a Johannesburg briefing that local beneficiation is not top of China’s all pervasive African strategy, sending a clear message that the field is wide open. The implication is clear; the days of corrupt wealth extraction from Zimbabwe are over. While they didn’t quite deliver a smoking message that thunders, but there was also no sound of dead cats bouncing. – Chris Bateman

Vestor media relations:

This week, the German-African Business Association and international law firm Pinsent Masons hosted a briefing session entitled “Zimbabwe’s journey to recovery”. Moderated by Ignaz Fuesgen (director, Ascend Strategic Communications) and George Sibanda (partner, Pinsent Masons), the session provided the audience an opportunity to hear about Zimbabwe’s new government’s plans for economic change, the regulatory aspects and investment opportunities into the country. On the panel were Harare based business and legal veterans, George Manyere, Francois Molife and Itayi Ndudzo.

George Manyere provided opening remarks and noted: “that the new Zimbabwe leadership was making a clear effort to dismantle the old laws of Zimbabwe, which included disenfranchisement and alienation”. Strong signs of its willingness to re engage investors have been expressed by the new President Mnangagwa with three investment commitments. These include dealing with the land tenure problems and accelerating compensation for losses suffered, scrapping the indigenisation law for all sectors other than diamonds and platinum and reforming economic zones to provide foreign companies protective measures for sustainable business engagement.

Zimbabwe’s president Emmerson Mnangagwa looks on during a panel session on day two of the World Economic Forum (WEF) in Davos, Switzerland. Photographer: Jason Alden/Bloomberg

Manyere cited that a big opportunity was the desire of the government to do things in a radically different way from the past and which was legally sound. Tactically, the government had to design something new for 2018 and with such a high unemployment rate, has little choice but to sustainably grow the economy for the benefit of all Zimbabweans. “A regulatory backed economic turnaround will resonate with foreign investors and could have the potential to sustain Zanu PF up to the 2023 election”.

Itayi Ndudzo added that the government: “would have to convert the economic rhetoric into legal frameworks, to provide tangible results”.

Commenting on investments opportunities, Manyere noted the attraction of Zimbabwe was that it provided multi sector opportunities.”Zimbabwe needs to focus on infrastructure and the opportunity for foreign investment is huge”. Government have already enacted a Joint Venture Act to partner with the private sector to build infrastructure. Another big area of investment is the energy sector, which could provide power into the SADC region through hydro, solar and coal fired power stations.

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Ndudzo noted that: “China would play a significant role in these big ticket investments, especially in mining and infrastructure as Zimbabwe has been courting China for a while”. However, “China’s emphasis was on extraction and not in domestic beneficiation, which cannot be part of the government’s growth plans for job creation. Investors therefore shouldn’t be intimidated by the Chinese dominance in infrastructure and many other sectors presented opportunities”.

Francois Molife proffered a number of other opportunities including in mining, agriculture and the revival of the beef sector. The fertiliser industry, once a self sufficient local industry now imported all of the required compounds at a cost of $430 million per annum. In order to create food security Zimbabwe had to return to domestic production of food and so fertilizer too should be locally manufactured. Another opportunity was in wildlife tourism, where for many years, wildlife enthusiasts may have chosen the more political stable Botswana as a holiday destination.

Zimbabwean five and two dollar bond banknotes, nicknamed “zollars”, are displayed in an arranged photo in Harare. Photographer: Waldo Swiegers/Bloomberg

Manyere added some caution.

The multi currency dilemma that has been a problem since 1990 has caused a lot of damage. Removing the recently introduced bond notes before the 2018 elections would create further instability. The currency uncertainty would continue until economic certainty was achieved. Political risk too would continue and investors are urged to diligently follow the discourse.

Molife’s concluding remarks gave credit to the new dispensation, noting that the belligerence of the past administration was a thing of the past and that business should start to align to capture the growth.

Manyere noted the need to find a strong local partner for foreign investors to succeed in Zimbabwe. Ndudzo added that doing business the correct way, with signed legal contracts would lead to success. He added that there were a number of institutions which assist in safeguarding investments, including the Reserve Bank of Zimbabwe and the Zimbabwe Investment Authority.