PRESIDENT Robert Mugabe this week proved to all and sundry he is Zimbabwe’s main stumbling block to foreign investment — an investors’ bogeyman — when he met Africa’s richest man, Nigerian billionaire tycoon Aliko Dangote, to clear the way for him to pour possibly billions into the country.
Editor’s Memo by Dumisani Muleya
Ordinarily, Mugabe’s meeting with Dangote, which triggered optimistic waves in the markets, should be hailed as a positive development, but a closer look shows that it is actually a bad approach. It proved an individual looms large over the system and runs government like his farm.
Besides and more importantly, it confirmed Mugabe is in fact the main obstacle which must be removed for serious capital to flow into the economy. Although there are many other problems which frustrate investors from coming to Zimbabwe like sovereign, economic and political risk as well as a poor credit rating, policy inconsistency and a hostile business climate, Mugabe is the wild card. He is unpredictable and unprogressive; only principled in his fossilised ideological rigidity.
By meeting Dangote to give him the go-ahead to invest in cement production, coal mining and thermal power generation, Mugabe showed he has the final say on who should invest or should not. If he had wanted, he could have blocked Dangote. In other words, things depend on his whims and caprices.
Therein lies the rub — why does a country’s investment prospects and development have to depend on an individual? This is as undesirable as it is self-centered. Investors don’t need to depend on Mugabe’s approval. They should be guided by the laws, rules and policies of the country. Mugabe can’t be a law unto himself.
That is why it is important to have clear policies, regulations and guidelines that investors must follow. Of course, policies must also be coherent and rational. Irrational policies like indigenisation — which is racketeering by regulation — are damaging.
Relying on an individual, no matter how powerful, to vet investors and give them permission to come in or not is not only entrenching personal rule, but also inviting rent-seeking and corrupt activities. In fact, it’s consolidating kleptocracy.
That is why Mugabe’s meeting with Dangote for him to get the go-ahead to invest and assurances his investments would be safe is such a bad thing. Even the route Dangote was forced to use — first sending emissaries to Vice-President Emmerson Mnangagwa and such other dodgy brokerages behind the scenes — is not good for the investor and the country. It may be good for “access brokers” who get “facilitation fees” and politicians who demand something for granting access to their offices, but not the country.
We have heard of top political leaders’ names being used to seek bribes or for extortion by their shady minions who believe that granting access to them is a form of business on its own when it is clear abuse of office and corruption.
This week’s events during Dangote’s otherwise important visit make Zimbabwe look like a banana republic, a failed state or indeed a personal property which somebody runs as and how he wishes.
What is needed to attract investors is not Mugabe’s fancies and impulses, but predictable policies and procedures. It is the rule of law and property rights which are imperative. In other words, investors need a hospitable business environment, not presidential assent to come to Zimbabwe. Investors also want incentives and security, not backwardness, to bring in their capital.
Over the past few years, Zimbabwe has experienced many economic ups and downs. To investors who haven’t been closely watching the market landscape, the rollercoaster may appear scary.
However, some investors are still optimistic like Dangote showed. Yet many are scared away by Mugabe’s toxic politics, policies and the bureaucratic labyrinth they have to navigate before investing.