Equities unfazed by Zanu PF shake up

HARARE - Zimbabwean equities market remained largely unchanged yesterday despite Tuesday’s mass purges of Cabinet ministers and Vice President Joice Mujuru, and President Robert Mugabe’s appointment of his two deputies.

This comes as the bourse’s key industrial index lost a marginal 0,08 percent to close at 167,64 points and as the Zanu PF leader named Justice minister Emmerson Mnangagwa and career diplomat Phelekezela Mphoko as vice presidents.

Analysts said Mnangagwa and Mphoko, together with the expected new Cabinet appointees, must be pro-business and investor-friendly policies.

Ministers who were sent packing include Francis Nhema and Dzikamai Mavhaire who headed the Indigenisation and Energy ministries, which play a key role in driving and guiding the recovery of Zimbabwe’s waning economy.

The development has raised concern about continuity and predictability of policies, amid slackening economic activity.

Simbarashe Zishiri, a research analyst with MMC Capital, said while it is not only the political landscape, but also the state of the economy that influences business and investor confidence, “investors prefer someone who understands business”.

“Investors and business people want someone who pushes for investor friendly policies,” he said, adding that, however, “it’s a 50-50 situation…it depends on how investors take it.”

Another analyst who preferred anonymity said that it is crucial to note who takes over the economically strategic ministries such Energy and Indigenisation, to see “if the new appointments inspire confidence.”

Zimbabwe is currently grappling massive power shortages — as long as 18 hours a day — hitting both domestic and industrial consumers

On the other hand, the country is implementing an indigenisation policy, which compels foreign investors to give up 51 percent to black locals.

However, the empowerment policy has been blamed for causing capital flight, hence the view that Nhema’s successor must balance national and investor interests.

Recently, political risk was identified as the biggest obstacle to business in Zimbabwe, based on findings of a chief financial officers (CFOs) survey by auditing and financial advisory firm Deloitte.

The Deloitte 2014 CFOs study indicated that most businesspeople were wary of operating in the country’s current political environment.

“The political landscape was named by the majority of Zimbabwean CFOs as the biggest risk to business performance,” said Roy Campbell, a partner with Deloitte, as he presented the survey in Harare last month.

He said this could be linked to the on-going nationalisation debate.

“One of the election promises was a stepped-up debate and implementation of local ownership through the indigenisation programme,” the report also mentioned.

Thirty-nine percent of respondents identified government regulation as one of the top five industry concerns.


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