The
Zimbabwean economy is reeling from an economic collapse as funds are drying up
with no investors wanting to commit themselves in investing in the resourceful
country. Efforts are being made to attract investors but all of which have come
to account for nought. The Finance Minister has made trips to China the U.K and
now he is in Russia with the minister of Mines to try and lure investors from
that country. With the current investment situation the minister’s trips will
only be viewed merely as shopping and tourism trips rather than business trips.
The way we have been dealing with other foreign companies that want to invest
in Zimbabwe has an effect in the way we attract foreigners and currently we
have been faring badly in the way we have dealt with major deals.
In
2008 the Indigenisation act was signed into law by the president which was a
move that deterred foreign investors in investing in the country and this came
at a time the country was in an economic crisis. Views were thrown around
regarding the act with even foreign companies operating in Zimbabwe feeling the
heat as their operations were also at threat due to the act. Few investors were
willing to come into the country with many of them citing lack of security in
property rights due to the act. In the heat of the moment more government
parastatals were failing in operations with some of them closing down, even
private companies were scaling down on operations with some of them moving the
greater part of operations to other countries.
Despite
those challenges investors were seeking a way to find an alternative way with
the government as some negotiated for a different policy altogether but with a
mind to develop the country. In that time Essar proposed a deal to the
government to buy the ailing steel giant Zisco-Steel which was a relief to the
government. The deal was signed and commissioned in 2011 by the Minister of
Industry and Commerce Professor Welshman Ncube with the initial agreement being
made in 2010 where Essar was supposed to hold 54% shareholding with Government
holding 36% and minority shareholders with 10%. This signalled a new and
brighter beginning in Zimbabwe as investors saw this moment as warming up to
foreign investors by the government. But fast forward to present time 2014 July
still the company has started operations due to many restraints that have been
brought about.
The
Indian ambassador once noted that some individuals had a vested interest in the
deal as they scuppered the progress, which highlights that the ministers
involved directly or indirectly wanted or still want to pursue their own
self-interests first over national
interest .to make matters worse the deal was signed and commissioned by the
President of the Mr Mugabe in a ceremony that was attended by senior government
officials and interested parties and if the president signs you expect
everything to fall into place thereafter but that’s not the case. Even after
the president signed and commissioned the deal the then Minister of Mines
objected the deal citing that the money to be paid for the resources was well
below the true value worthiness of the minerals and this stalled progress.
Efforts were put in place but nothing came to fruition and even the now new
Minister of Mines has not put an end to the discord. One thing that we must be
aware of as a country is that these major deals come as a huge test which the
global market examines the way we deal with investments and as it is despite
assurances of the deal still being alive we have failed.
The
banking sector has been suffering from liquidity problems and in their practice they have also attracted investors with Banc ABC viewed as the biggest winners
for investors as they the Atlas Mara investment company taking over the reins.
The deal is still in progress for Banc ABC Zimbabwe but sections within the
sector are saying that the deal’s progress is now being affected by issue of
Indigenisation which was dealt with when an agreement was signed with the Minister
of Finance present. If this is true then surely it will be another nail to the
coffin of the economy as it shows that government within itself is pulling in
different directions thereby bringing discord to the economy. Also Tetrad
Investment Bank has had a buyout deal with a Russian Consortium but it has been
dragging for a while hampering the operations of the once vibrant and promising
brand. This deal will surely be a barometer for the Russian Investors which the
government is trying to lure to the country. If the Tetrad deal is not dealt
with amicably and swiftly then the ministers should just forget about investors
from that country.
We
now have the Zimbabwe Investment Authority which is the first port of call for
any foreign investors and it is said to be a one stop shop with processing of
papers in just five days which is good for business. But investors have
complained about the paper work they have to fill in and the many offices they
have to visit. Hopefully the Z.I.A will be able address all of the problems
investors might be facing.
In
short government must put an end to the discord in the Indigenisation act, come
out with an investor friendly policy that will attract more foreign investment
and boost growth. The President’s powers should not be undermined once he signs
a deal as this will make stakeholders as the question of who is running the
country, because the President usually signs after all of his ministers have
agreed. The process of facilitating any investment opportunities to foreigners
should be stringent but less rigid in processing as this slows down projects.
These current pending deals should be finalised and approved by all interested
parties in the government if we still want foreign investment.
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