Independent Comment: Policy certainty critical element

Tsvangirai seized the opportunity to make a good case for Zimbabwe and reassure investors, rattled by nerve-racking moments over the controversial indigenisation campaign following government’s move on Zimplats last week, that there is still room for a stable and workable policy framework.

He spoke extensively about vast investment opportunities in Africa and the continent’s “toxic politics”, indicating there is a new generation emerging on the continent which wants to build strong economies, create jobs and develop a qualitative and affordable social delivery system, especially in the fields of health and education. He also spoke about the development of ICTs to better link the people to their governments, businesses and economies.

“Our challenge is to differ from the old generation of African leaders which has pilfered national resources, pick-pocketed the collective people’s struggle and shut their ears to the loud national demand for democracy and good governance,” he said.

“They have personalised national institutions, perfected the art of political patronage and bastardised their own legacy all to the detriment of prosperity, investment and economic growth. A small elite in many African governments has benefited from the national cake while the ordinary African survives on less than US$1 day.”

The premier went on: “It is the same culture that brought about the spring revolutions when nations and their people became impatient with repressive leaders”.

He said Africa is full of opportunities for growth and prosperity but this could only be realised if there is competent leadership, good governance and sound policies, indicating the continent is no different from China given its huge market of over a billion people.

It was a good delivery but the key point was that Zimbabwe, apart from good and competent leadership — which is simply not there at the moment — needs a stable and predictable policy framework. Policy certainty is critical to investment and economic growth. Genuine investors always prefer peaceful and stable environments not countries in a state of flux.

“My experience as Prime Minister of Zimbabwe is that peace is a key factor for investment. That is why policy consistency, stability and policy predictability are the key ingredients of luring investment,” Tsvangirai said.

This is precisely what we have always been saying, even though our leaders just don’t get it.

Zimbabwe, which went through a decade of an economic meltdown and hyperinflation and in the process achieved a dubious distinction of having the highest rate of inflation in recent economic history and the fastest-shrinking economy outside a war zone, needs to attract investment and creates jobs. For this to happen, policies must be workable,consistent and sustainable.  

Ad hoc and chaotic measures create uncertainty and investors keep away because they can’t be sure whether and how policies might change. That is why policy credibility and certainty are critical.

For two years now President Robert Mugabe and his Zanu PF ministers have been ratcheting up the pressure on foreign-owned companies, demanding that they surrender 51% of their shares to indigenous Zimbabweans.

Last week they arm-twisted Zimplats, which is owned 87% by South Africa’s Implats, the world’s second largest platinum exporter, into accepting in principle to dispose of its equity. The move into Zimplats, Zimbabwe’s largest exporter, has the potential of being a game-changer, economically and politically, especially in view of the next elections.

Whether the intensifying campaign of expropriation, under the rubric of indigenisation, swings the election for Mugabe or not, if foreign-owned companies that form the backbone of the economy are grabbed, Zimbabwe will go back to primitive subsistence economic levels.

And in the process Mugabe and his clueless cronies will learn it the hard way that capitalism without capital cannot work.

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