Handle with care surge in foreign investor appetite

Industry and Commerce minister Sekai Nzenza, according to a report elsewhere in this issue, has held crucial private talks with foreign investors following a surge of interest in Zimbabwe. She does not explain what has been driving the appetite. But the most important thing is that, if Nzenza is saying the truth, investors are flocking back possibly not to invest but to appreciate how President Emmerson Mnangagwa’s government is behaving.

As she says she has hosted European and US firms exploring opportunities in capital-intensive sectors such as mining and vehicle assembly. Zimbabwean inventors are ill-equipped to enter these sectors because the banking system is weak and foreign bailouts have dried up due to a high country risk profile.

In many ways, what Nzenza says is good news. Foreign investors could still be giving Zimbabwe a chance after Harare has always demonstrated that it is not open for business. But she must understand that by seeking an audience with her privately, investors are trying to hear from the horse’s mouth what is in store for them.

They are not interested in empty promises and political rhetoric. They want to see immediate changes taking place in Zimbabwe in line with what officials would have promised. This is very important because they don’t want to lose out as soon as they deploy capital here. They are probably aware of the volatile political and economic crises that have triggered de-industrialisation.

They are very likely aware that there has been little or no political will to tackle an ages-old volatile exchange rate. The collapse of once world-class infrastructure is clear for all to see, and its implications on trade have been well documented. But aside from endless promises and declaring the decay a national disaster, nothing concrete has been done to address the infrastructure crisis.

Zimbabwe has been unpopular for doing wrong things. These include allegations of stolen elections and arresting peaceful protestors. This has aggravated the country-risk profile and forced lenders to withdraw. But the worst worry has been the currency changes that have seen millions lose their savings and investments. Compensation has been difficult to come by because the government is determined to protect certain quarters.

Many investors have also failed to repatriate their dividends. The results have been disastrous. Firms have folded and capital flight has increased. Investors landing here to talk to Nzenza want to hear real commitment, and corresponding action demonstrating that their worries are being addressed.

If Nzenza falls into the trap of making empty promises, she must never entertain hopes of seeing these investors troop back. They will pass through and end up in countries that are ready to listen and take action. This is how countries like South Africa, Mozambique, Angola and Botswana have been able to attract healthy FDI inflows. Except for last year when the Covid-19 pandemic affected economies, these countries have mostly been notching double digit growth rates when Zimbabwe has been struggling to attract FDI to prop up its failing economy.