HomeBusiness DigestFailure to Reform Holding Back Investment –– Analysts

Failure to Reform Holding Back Investment –– Analysts

IN the Hollywood film Jerry Maguire, Tom Cruise plays a sports agent with an onerous task of raising Cuba Gooding Jnr’s game and getting him a better contract.


Gooding, an egomaniac football player for the better part of the movie, keeps up his pesky and cocky attitude to his own detriment telling Cruise in one of the scenes “show me the money” first.

Back home, former Chamber of Mines chief, Ian Saunders, at an annual general meeting a few years back, likened government’s behaviour to Gooding’s portrayal of the football player in the Oscar nominated film.
Like Gooding, he said the Zimbabwean government was demanding to be shown the money without any behavioural change or reform. Unlike in the film, Gooding –– the government’s equal –– finally comes around and gets the dream contract after dealing with his issues.
But could the Zimbabwean government be changing its attitude and preparing to play ball this time judging by recent comments at last week’s investment conference?
President Robert Mugabe’s assurances that Zimbabwe is ready to respect property rights last week came as music to investors’ ears but investors are still in a wait-and-see mode judging by the absence of foreign direct investment.
Mugabe promised that the new government “upholds the sanctity of property rights”.
His comments came against a background of continued farm invasions and apparent lack of action on the invaders.
Mugabe said: “The conference will do well to ensure that our investment policies are fully explained as there has been uninformed apprehension concerning some of them particularly those to do with indigenisation. Such policies as the Indigenisation and Economic Empowerment Act should not be viewed as obstacles to investment. Rather, they should be welcomed as promotive of the greater participation of our people in the economic activity that builds to good business returns for the investor. In addition, foreign direct investment is most welcome as it brings new technology, capital and new markets.
“It is my pleasure to invite all the potential investors to sample our investment opportunities from which I am sure, they will find some areas which are appropriate and supportive of their endeavours.”
But his invite is fraught with suspicion and many investors still view the indigenisation law as an impediment to investment.
Analysts argue that government’s failure or success in dealing with farm invasions should be the benchmark in measuring its commitment to respect and defend property rights.
Until government deals or fails to deal decisively with the uncertainty over farms occupations, investors are not likely to commit a dime towards investment in the country.
Instead, government seems to be more comfortable accepting donations from developed nations than attracting investment.
Apart from that, Mugabe and his government have in the past behaved like a crazy bunch locked up in the attic that investors pretend do not exist until they appear and pull a totally nutty stunt on the investment and economic front.
Investors had gotten conditioned to a barrage of takeover threats at the height of Zimbabwe’s economic crisis while those who had existing operations in the country were arrested for increasing the prices of goods without government’s permission.
Last year some businesses were shortlisted for takeover because the owners had European origins and accused of attempting to remove Mugabe from power by stoking the people’s anger through incessant price increases.
To others, Mugabe is the sort of leader who says one thing and does the other. As such, many still believe Mugabe’s promises that the new government upholds property rights could be mere lip service.
Deputy Prime Minister Arthur Mutambara says he is making desperate attempts to rebrand Zimbabwe’s image.
Analysts say rebranding the country’s image will not be a stroll in the park and demands political will from all the parties in government.
Mutambara also faces an uphill task owing to failure by the principals — Morgan Tsvangirai, Mutambara and Mugabe — to iron out sticking issues arising from the Global Political Agreement (GPA) the parties signed last year.
This is also adding to uncertainty on Zimbabwe, analysts said.
Saunders, now chief executive of New Dawn Mining Corporation, a company with a listing on the Frankfurt Stock Exchange and trading under the 3DM, last week gave the Independent an insight into investor perception on Zimbabwe.
He said: “Currently 3DM is performing a little lower than expectations. Certainly with some of the political and economic issues being unresolved there is some hesitancy on the part of certain investors to aggressively invest in Zimbabwe. Once these matters are resolved we see a very bright future for 3DM.”
Mutambara last week admitted government is lacking credibility because of failure to halt farm invasions and re-introduce the rule of law.
He said: “For you to be trusted, credible to investors, we must resolve that matter (outstanding issues) because if we don’t, we lose credibility. How can we convince investors if we don’t respect our own agreement.”
Critics blame Mugabe for ruining the economy with the help of his central bank chief Gideon Gono. Under Gono inflation rose to record levels.

BY CHRIS MURONZI

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