HomeOpinionElection uncertainties scare away investors

Election uncertainties scare away investors

The wrangling among Zimbabwe’s diverse political parties, numerous political action groups, the president, prime minister and many others in the political hierarchy as well as the media as to when the presidential and parliamentary elections will be (or should be) held is having a grievously negative impact on the country’s economy, severely worsening its already very fragile state.

Column by Eric Bloch

The president persists that the elections be held on June 29 2013, the date constitutionally prescribed for the dissolution of the present parliament.

In pronounced contradistinction, the majority of Zimbabwe’s other political leaders and their parties, with reason, insist that the requisite elements for a wholly transparent, free and fair election cannot be created and assured if it is to be held on that date and therefore, the polls should be delayed for such period as permitted by the Constitution and as will enable the elections to be properly and fairly conducted.

Effectively, their demands are that the elections should not be conducted on June 29 2013, but that they be held not later than October 30 2013.

It is also very evident that the Southern African Development Community (Sadc) is not only supportive of the election date being one which can assure the propriety of the elections, but is also insistent that this be so and therefore it is not possible for the elections to be conducted in June.

Over and above the immense sense of insecurity instilled in almost all Zimbabweans by the unceasing political squabbling over the election date, there are fears that the elections will not be free and fair.

For some of Zimbabwe’s key politicians endlessly seek to minimise the extent to which international observers should be allowed to monitor the polls, which are vital to the country’s future. The grounds recurrently cited as justification for certain would-be observers to be barred are that such observers would be representatives of countries which have allegedly imposed “illegal” international sanctions on Zimbabwe.

In doing so, the opponents of a presence of such observers stubbornly disregard that there is no “illegality” in the application of the sanctions, and that if the elections are properly conducted, such sanctions would be lifted and would cease to exist.

The concerns of most of the populace are intensified by the frequent threat from leaders of diverse action groups such as the alleged war veterans and recurrent incidents of apparent involvement in the political arena by some of the leaders of Zimbabwe’s security and armed forces (who, constitutionally, should be apolitical).

Their vituperative outpourings and frequent threats fuel intensifying apprehensive of violence, intimidation and harassment, and especially so in rural areas.

The further erosion of confidence in the future, occasioned by the extremely negative vibes as to when and how the elections will be conducted, has directly and pronouncedly adverse impacts on the economy. Worry and despondency is not conducive to productivity, which is one of the prerequisites for the viability of industry and of many other economic sectors, including agriculture.

Such uncertainty destroys confidence within the financial sector, resulting in lack of availability of loans and other facilities greatly needed by most operations in the economy. Similarly, the atmosphere of doubt intensifies the reluctance of many to keep their funds within banks and other financial institutions.

There is an unfounded belief that such limited funds as people may have are more secure if kept in their wardrobes, under their mattresses, or in their wallets and handbags. Businesses prefer to hold such cash as they may have in their safes.

Many fear that the country might not have a democratically-elected Government in office.

Many are therefore externalising such monetary resources as they are able. The result is an intensifying monetary illiquidity in Zimbabwe, further constricting economic activity. Therefore the economy will continue to decline and it will be foolhardy for Zimbabwe to prematurely revert to its own currency.

For a very considerable time, potential foreign investors have been reluctant to commit their resources to Zimbabwe, notwithstanding their awareness of the stupendous potential for such investment. They have long recognised the magnitude of opportunity for viable and substantive investment into mining, manufacturing, tourism, services, and many other sectors of the economy.

However, ever since the pursuit by Zimbabwe of a land reform programme which had total disregard for property rights, liability under Bilateral Investment Promotion and Protection Agreements (Bippas), and for preserving and enhancing agricultural viability, potential investors were fearful of similar inequitable and destructive policies being pursued by government in other economic sectors.

Such a pursuit would destroy investment security and occasion great losses for investors, and hence they were reluctant to pursue any of the many investment opportunities.

The concerns of investors were subsequently intensified by Zimbabwe embarking on its Indigenisation and Economic Empowerment programme.

Almost without exception, the potential investors are supportive of the principles of Indigenisation and Economic Empowerment, but not when it is founded on investment and asset expropriation, deprivation of investment security, and imposition of indigenous participation without availing the investor the opportunity to select his or her own indigenous co-investors.

Now the hullabaloo over when and how the elections will be conducted, and associated disquiet as to whether such elections will yet again be devoid of law and order and will not be democratic, free or fair, has provoked even greater reservations by potential investors as to whether or not to pursue opportunities here.

For economic recovery to be comprehensive, investment is essential, but Zimbabwe continues to create concern barriers for the much-needed investment.

Zimbabwe’s economic wellbeing is also contingent upon alleviation of its gargantuan overdue foreign debt. It can only achieve that by a combination of debt-rescheduling, and debt-relief.

To a great degree that relief can only be obtained under the Heavily Indebted Poor Country (HIPC) convention, but uncertainties on elections are a major barrier to seeking and being granted HIPC relief, or any rescheduling of debt.

The international community will not entertain any representations for such measures to be granted unless convinced that Zimbabwe is genuinely conducting unequivocally proper, free and fair, elections.

The current election hiatus does not provide that conviction. Similarly, Zimbabwe greatly needs, in order to spur economic recovery, international developmental aid, over and above the welfare aid presently given to address the inadequacies of food availability, healthcare, and education. But that development aid will not be forthcoming to any significant extent until proper elections are held.

For great economic recovery to be realised, the first and most urgent need is for elections to be timeously held, but not with such undue haste as precludes their proper conduct.

It is blatantly evident that legitimate elections cannot conceivably be held within six weeks as sought by the president and his political party, but equally that necessary actions must be vigorously and intensively pursued to ensure internationally acceptable elections within the next four months.

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