23 November 2012

Zimbabwe: Mugabe Taking Zim Nowhere

editorial

Photo: IRIN
Zimbabwe's capital, Harare

REMARKS in yesterday's NewsDay by Indian ambassador to Zimbabwe, Jeiteendra Tripathi, that foreign investors are now scared of investing in the country due to the mishandling of the multi-million-dollar takeover of Ziscosteel by Essar Africa Holdings are instructive.

Indian diplomats in Harare have been complaining about government's clumsy and incompetent handling of one of the biggest investment transactions Zimbabwe has ever seen. Essar was expected to invest US$4 billion over four years as part of the deal.

However, the deal has been stalled by disagreements within government over Mwenezi iron ore concessions and other clauses in the agreement.

Although cabinet recently said the original agreement must be restored as it was and an implementation mechanisms be developed, no progress has been made, hence Tripathi's bitter remarks.

"There are many potential investors, but they are now scared," Tripathi said, adding Zimbabwe was sending "wrong signals to investors".

This is very enlightening, especially coming from one of the biggest emerging economies in the world which invests billions in developing countries.

Context is important here. Delhi is part of the grouping which includes Brazil, Russia, India, China and South Africa (Brics), with large fast-growing economies and significant influence in regional and global affairs. These countries represent almost three billion people -- nearly half the world's population -- and have a combined nominal GDP of US$13,7 trillion and an estimated US$4 trillion in foreign reserves.

Now if Zimbabwe is messing up with countries like India, then it is definitely shooting itself in the foot. Such sort of unprogressive actions flow from flawed political thinking, poor policy frameworks and lack of vision from the country's leaders.

Combine this with ongoing company seizures under the rubric of indigenisation -- the very altar on which the Essar deal is being sacrificed -- then it becomes clear what Tripathi is talking about. Zimbabwe's business environment is extremely hostile and unless this is addressed, President Robert Mugabe and his Zanu PF cronies are taking us nowhere.

Instead of pursuing ignorant economic policies and frustrating investors due to greed and self-serving interest, quite apart from corruption and incompetence, Zanu PF economic illiterates must be fighting for investment like in other countries -- the only sure way to economic success and prosperity.

They must be scrambling for investment, especially foreign direct investment, to lift this country out of poverty and misery which they largely authored.

Although there is no one standard formula for economic growth, leaders of competitive economies have a clear vision and strategy about how to develop their countries.

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