IT SEEMS that potential investors looking at Zimbabwe are hoping for a signal that they can safely rush into the so-called El Dorado of riches and opportunity.
South African business people thronged yet another conference on the future of Zimbabwe last week, this one hosted by The Economist magazine, seemingly in search of a new piece of information that will magically open an investment door for them.
It was not to be. The same old debates swirled around the room and issues were raised that have been aired at many similar events over the years. The familiar message was that not enough has changed in Zimbabwe to get a critical mass of people to part with their money just yet.
Prime Minister Morgan Tsvangirai and his team did their best to persuade the audience that change has in fact happened, saying impatience from outside the country over the pace of positive developments has obscured exactly how much has changed.
The economy has stabilised, currency risk has been removed with the introduction of the dollar and rand for transactions, inflation is low, there are medicines in the hospitals, food in the supermarkets and water in the taps. Energy problems are being addressed through rehabilitation of and investment in capacity, investment processes are being streamlined and old laws are being reviewed.
But the issue for investors is not what has changed, but what has not — the “elephant in the room” as Tsvangirai described it. “As we speak, everyone is preoccupied with what he is doing and what he is thinking.”
The reality is that no one outside Zimbabwe will believe things have changed for the better until President Robert Mugabe steps down.
Tsvangirai said many Zimbabweans would like justice meted out to Mugabe for the depredations he has visited on his country, but an “eye for an eye might leave Zimbabwe blind”. Reconciliation is a tough balancing act for the man who is trying to rebrand Zimbabwe while all the while fighting “Brand Mugabe”.
And the truth is that political risk is still an important factor. Mugabe’s Zanu (PF) party remains a toxic force. It is out of touch with modern needs and exists in a political vacuum, relying on crude propaganda and constant reference to liberation- era glories to keep itself afloat.
Even as Tsvangirai tried to defend his old foe, saying many perceptions about Mugabe were misplaced, Zanu (PF) was busy undermining the unity government arrangement.
Zanu (PF) was not represented at last week’s conference, but its propaganda machine was at work. Party chairman and Zimbabwe’s ambassador to SA, Simon Moyo, placed an advert in The Star to remind people that Zanu (PF) had liberated Zimbabwe “from the shackles of colonialism and settlerism”. His political rant included a sideswipe at Tsvangirai’s Movement for Democratic Change (MDC): “Offshoot political parties will remain offshoot, offside and scoring own goals.” It was a stark reminder of the reality faced by Zimbabweans fighting for change.
Mugabe’s removal is a necessary, but not sufficient, lever of change. His potential successors are old guard politicians with poor records. The MDC itself has internal problems and is still not taken seriously by all countries in the region.
There are other investor concerns, such as the indigenisation regulations that have yet to be finalised; contradictory policy statements from politicians on either side of the divide; no resolution on the future of the currency; and general Zanu (PF)-inspired rot in the system.
Most importantly, there is uncertainty about the process leading up to, and the likely result of, next year’s election that will end the transition phase. So investors continue to sit on the fence, waiting for that signal. But it might be worth asking why Zimbabwe is regarded as a special investment case? South African investors are going into other countries with big problems, such as the Democratic Republic of Congo, Sudan and Angola, where the risks are more insidious and the operating environment more opaque.
Perhaps investors need to take a step back from the emotionalism and sentimentality that characterises analysis of Zimbabwe and compare it dispassionately with other investment opportunities in Africa.