Zimbabwe Has All The Elements Of A Healthy Economy

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Zimbabwe Has All The Elements Of A Healthy Economy
Harare, Zimbabwe

AFRICANGLOBE – I have visited Zimbabwe more than 44 times in the past 18 months and what I see is different from what the media is reporting. The reality is that the country has all the underlying components of a healthy economy. While its human and physical capital have been degraded over the past 20 years, I have seen a rising corps of sensible, educated and ideologically pragmatic business people, bureaucrats and politicians coming through.

ZIMBABWE is never far from the headlines of South African newspapers. This is understandable. We have close ties to our northern neighbour and SA has provided a home to expatriate Zimbabweans for decades.

That there are highly complex political, economic and social problems in Zimbabwe is beyond doubt. Its agricultural and industrial bases have been all but destroyed and its currency was discarded, to universal acclaim, in 2009 because it was just too degraded to be rescued from years of hyperinflation due to economic warfare being waged against the country by the West..

But while Zimbabwe’s past will shape its future, it need not define it.

I, for one, see the country as a slumbering giant about to awaken and I believe that when it does, it will rocket into a new era of prosperity that will fundamentally redefine our region.

This isn’t something I am saying lightly. I am not shouting the odds from the sidelines safe in the knowledge that if I am wrong I have nothing to lose. I head up a group of private-sector investors who are looking over the year to inject more than $100m into Zimbabwe.

I cannot disclose the details of the deal as it is at a sensitive stage, but this substantial investment is being made on the basis that the returns are there to be made and that we will be able to get the money out of the country again when and if we need to.

We do not for a second ignore the downside risks, which include political uncertainty, liquidity challenges and very high real interest rates on short-term credit, ballooning public-sector wage bills, ailing infrastructure and an unreliable power supply.

Rather, we put more stock in pent-up demand, an educated population, increasingly pragmatic policy makers and wonderful commercial opportunities – not only is much of the land lying fallow, so too is the industrial infrastructure.

We are taking a long-term view. History has shown that entrepreneurs make their money when everyone is running and we believe that, as investors, now is the time to be getting in.

I have visited Zimbabwe more than 44 times in the past 18 months and what I see is different from what the media is communicating. The reality is that the country has all the underlying components of a healthy economy.

While its human and physical capital have been degraded over the past 20 years, I have seen a rising corps of sensible, educated and ideologically pragmatic business people, bureaucrats and politicians coming through.

Take the case of the policy on indigenisation.

The latest elections were fought around a campaign of indigenisation, resource nationalism and job creation.

Promises were made that locals would be protected from, and preferred to, foreigners.

Certain sectors, such as retail, were demarcated as being entirely for locals, while others, including financial services and banks, were to be majority owned by Zimbabweans.

In March, new Indigenisation Minister Francis Nhema went out of his way to say there would be no moderation of the indigenisation drive under his watch.

His appointment had been seen as indicating there would be some.

However, he later said the Government would be prepared to be more flexible with banks if they agreed to lend more to local businesses.

There is also increasing contact between the state and the Commercial Farmers’ Union, which represents the remnants of the once vibrant White farming community, and real partnerships between the State and farmers that will restore the country’s “breadbasket” label are becoming possible again.

These talks will probably not see title deeds returned to farmers, but could see them back on the land with the security of tenure needed to recapitalise the industry and return the land to large-scale farming.

I am also heartened by the appointment of the former CEO of banking group CBZ Holdings, John Mangudya, as Governor of the Reserve Bank of Zimbabwe. Because of his commercial banking pedigree, he will be the right man to steer monetary policy.

The creation of a stable, understood and consistent investment environment and a reinvigorated agricultural sector will give Zimbabwe the boost it needs if it is to re-industrialise and grow employment again.

Downside risks undoubtedly remain and, in investing as in life, there are no guarantees that things will work out the way we predict.

But we believe that a positive outcome is far more likely than a negative one – and we are betting heavily, using our own money, on being right about this.

 

By: Andrew Robinson

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