20 March 2019

Zimbabwe: Bilateral Meetings Underscore Reform

editorial

When South African President Cyril Ramaphosa jetted into Zimbabwe for bilateral meetings this week, his hosts had high expectations for an economic rescue package, but it soon became crystal clear that the visiting leader - although he leads the continent's most industrialised economy -- did not bring suitcases full of money.

Zimbabwe's southern neighbour, apart from preparing for elections which are around the corner, has its own fair share of burdens -- not least slow growth and unemployment. Ramaphosa arrived in Harare amid pomp and ceremony, receiving a warm welcome from his counterpart President Emmerson Mnangagwa. The expectations were high. The meetings had a lot to discuss. The optics were superb. The one missing ingredient: a financial bailout which would have made a world of difference.

From the word go, it was clear the Zimbabwean side was always going to be overly optimistic in its expectations in vain.

Although low-hanging fruit is not something to be frowned upon because beggars are not choosers in international relations, what Zimbabwe really needs is investment -- and not donations.

If investment is crucial -- as all rational people would agree -- the big question is: what is Zimbabwe doing to create a conducive environment for investors? As we exclusively reveal today, the South African investors have expressed grave concern over the hostile business environment in Zimbabwe. The South Africans are particularly displeased with serious policy impediments such as uncertainty of land tenure, delayed payments for goods and services, as well as difficulties faced in repatriation of dividends.

Here is the brutal reality: every country on the face of the planet must compete for the same pool of foreign investment.

Enterprising countries lure investors by ensuring, among other enablers, reform, the ease of doing business, rule of law and property rights.

Confidential minutes from the Zimbabwe-South Africa Bi-National Commission show that foreign investors are not too keen on committing their money to this country at the moment due to a combination of hostile and prohibitive policies and practices.

How do foreign investors venture into a country where the most basic tenets of international best practice in financial accounting are not guaranteed? For starters, in what currency do businesses conduct trade? RTGS? In recent days, we have witnessed big companies -- some of them with significant foreign shareholding -- struggling to find a base currency to report their financial results.

Secondly, investors will not commit to an economy that makes it impossible to repatriate dividends. Investors have rights and obligations. They are required to pay their taxes like good corporate citizens, but they have a right to enjoy a return on investment within the remit of the law. While government has repeatedly expressed the willingness to improve the investment climate and rolled out some reforms, more needs to be done beyond lofty rhetoric to assure investors the country is a safe, stable and profitable destination free of repression, lawlessness and corruption.

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