IT was predictable that when President Robert Mugabe and his Zanu PF were re-elected in July 2013, amid charges of rigging, their new government would not to secure broad-based legitimacy to normalise external relations and fix the broken economy.
Editor’s Memo with Dumisani Muleya
Although Zimbabwe has of late been receiving a host of investment delegations — from the United Kingdom, China, Russia, Germany, United States and France, and other countries — it is clear investors are taking strategic positions as they look on the horizon beyond Mugabe.
Talking to foreign diplomats based in Harare about this issue, one gets the sense that they have now understood remaining locked in combat with a 91-year-old, visibly frail due to old age and associated health complications, is not just unhelpful, but also counterproductive.
Reports by investment management companies, securities firms and fund managers show Zimbabwe provides creamy opportunities despite serious political risk — which measures the stability of a country based on factors linked to government, security, civil society and the economy — related to Mugabe’s succession and attendant dynamics. The explosive political and security situation is also chilling.
Yet international investors have complex matrices when it comes to calculating political risk and setting themselves in dicey emerging markets like Zimbabwe.
Most transnational companies are already navigating the choppy waters of globalisation, including turbulent markets, and none, presumably, are sailing close to the wind, given their ability to glean quality information from informed researches and reports to help them make calculated moves at the right time.
Corporate leaders seem to be beginning to have a sophisticated understanding of this issue. They now know political risk analysis is more nuanced than economic assessment as they grapple not just with broad, easily observable trends, but also with subtle shifts in society and even idiosyncrasies of dictators like Mugabe.
And those hard-to-quantify factors must constantly be pieced into a dynamic narrative and jigsaw puzzle of issues like Zanu PF’s leadership succession within historical and regional contexts.
So investors can tell the current situation in Zimbabwe is different from what it was before 2009, not that much has changed, but society has moved on even though Mugabe remains an albatross around the country’s neck.
That Mugabe is deadweight on Zimbabwe may no longer bother investors as it used to. That’s why political risk analysts are now able to detect silver linings in economists’ dark clouds. Politics never stops moving, and risk analysts are following Zimbabwe’s story as it develops.
Several issues flow from this. To begin with, international investors are bound to look at Zimbabwe in a global context even though they will inevitably zero in on its internal situation. They appreciate markets are now interconnected than ever before and that tremors in one country or region can affect a vast swathe of the global economy. So local situations and events cannot be viewed in isolation.
The global reach of the only superpower, the US, means seismic happenings around the world can be triggered by its actions or inactions. The US has demonstrated an unprecedented capability to respond to international shocks — and to create them. Investors will always factor its role in their designs.
Foreign investors are also now sizing up Zimbabwe because the offshoring trend is growing as businesses scramble for opportunities outside, particularly Africa.
Since the world is increasingly dependent for energy on states troubled by considerable political risk such as Saudi Arabia, Iran, Nigeria and Russia, among others, this sort of investment exposures are now inescapable. Political instability in these oil-producing states can quickly trigger vulnerabilities all over the world and hence the need to understand no one is immune to such problems.
This is the context in which foreign investors are currently exploring Zimbabwe.