HARARE - Faced with the twin threats of a collapsing economy and mass unrests, President Robert Mugabe is being forced by the dire economic situation in the country to embark on a cocktail of reforms of Zimbabwe’s “medieval” investment terrain, in a desperate bid to stimulate both local and foreign direct investment.
This comes as economists have warned that the country has hit the depths of humanitarian and economic despair that were last experienced in 2008, when Zimbabwe’s seemingly unending political crisis precipitated an economic meltdown of monumental proportions which culminated in the death of the Zimbabwe dollar.
At the same time, and as the country’s economy continues to implode — resulting in rising poverty levels, as well as heightened company closures and job redundancies — more and more observers are predicting the imminent explosion of social unrest and debilitating mass actions, with the latest think tank to envisage such doom and gloom being NKC African Economics (NKC) — a unit of the world famous Oxford Economics of the UK.
Analysts who spoke to the Daily News yesterday said there was no doubt that the changes to the country’s investment terrain, that Mugabe and his Zanu PF government were embarking upon, had been forced on Harare by the deteriorating economic situation in the country -- particularly as the nonagenarian had once vowed that no one would force him to amend or tweak laws such as those relating to indigenisation.
They said it was in this light that the minister of youth, Indigenisation and Economic Empowerment, Christopher Mushowe, had recently said that the laws compelling investors to cede 51 percent of their investments to locals would now only be mandatory in the mining sector.
Mushowe said investors in other sectors would be able to negotiate with the government regarding what proportion of their businesses they could sell to locals.
“The only area where we do not entertain negotiations is mining, because as indigenous Zimbabweans, our contribution is the (mineral) resource. In other sectors, proposals are considered case by case. We are saying to the investors, if you come, your investment is safe, but we encourage you to partner locals,” he said.
This is a major climb-down from what Mugabe asserted in August 2013, when he vowed to carry the “final phase of the liberation struggle” and “final phase of total independence through the total indigenisation of the economy”.
“We will do everything in our power to ensure that our objective of total indigenisation, empowerment, development and employment is realised,” Mugabe said then.
And on Monday, when Africa’s richest man, Aliko Dangote of Nigeria, announced plans to invest in Zimbabwe’s power and mining sectors, and to construct a 1,5 million tonne per annum cement grinding plant in the country, those stringent conditions were finally and truly put on the back burner.
Well-placed sources told the Daily News yesterday that apart from working to relax the country’s stringent visa requirements, authorities also promised Dangote that they would “revise all the other laws” that had long been castigated as hostile to foreign investment.
“While many people may not realise this, the recently passed Labour Amendment Bill was another carefully-considered strategy by the government to clear some of the hurdles that are often cited by investors as reasons they will not bring their money to Zimbabwe,” one insider said.
Economist Godfrey Kanyedze concurred yesterday, saying the labour amendments were “the way to go”.
“We need to be as inclusive as possible on the labour laws, and the softening stance on the Indigenisation Act is equally welcome because the previous stance did not help matters,” he said.
Asked if investors were now likely to stampede to Zimbabwe, Kanyedze warned that “capital is a coward. It waits until it realises that you will walk the talk”.
Former Finance minister Tendai Biti said Mugabe and his government could not be trusted to keep their word.
“It doesn’t matter what Zanu PF tries to do, they are not capable of executing anything. Nobody trusts them and Zimbabwe must jettison them and start afresh,” he said.
A fortnight ago during his uncharacteristically short State-of-the-Nation Address, Mugabe unveiled a 10-point plan, which he hoped would unlock the potential of small to medium enterprises in the country, promote joint ventures and public-private partnerships, and attract investment.
An International Monetary Fund (IMF) team is also currently in the country to review the second phase of Zimbabwe’s Staff Monitored Programme (SMP), which could see a resumption of aid from the Bretton Woods Institution to the country, which has arrears amounting to $10 billion.
But Biti said sarcastically that no amount of “mascara” could hoodwink investors into pouring their money in Zimbabwe.
“The so-called 10-point plans are just ruses meant to hoodwink the IMF. This is drama for the IMF to see. If they are really serious, why not repeal the Indigenisation Act completely,” Biti said.
The former Finance minister, whose proposals for a staff audit of the country’s bloated civil service were stymied by Zanu PF, said the ruling party should first respect property rights, stop land invasions and bring back Itai Dzamara before putting out its disingenuous plans.
“They are spending money as if it grows on trees. The fact is, you eat what you kill. They should bring order in the diamond sector and arrest the corrupt ministers. As long as we have morons in government then we are doomed. These people have redefined the word failure,” Biti said.
Analysts have said contrary to the government’s propaganda, the Zimbabwe economy was “definitely dying”, as manifested by worsening liquidity challenges, company closures and job losses.
Speaking in recent interviews with the Daily News’ sister paper, the Daily News on Sunday, the analysts — who laid the blame squarely on Mugabe and his warring Zanu PF for the country’s myriad problems — also lamented the fact that the nonagenarian appeared “completely clueless” about finding solutions to the problems.
The World Bank has said Zimbabwe’s economy will at best grow by a miserly 1 percent this year, the country’s lowest growth forecast since dollarisation, although many economists say this is way too optimistic and that the economy is in fact already in recession.
Economists also say Zimbabwe cannot afford a further contraction of the economy as the country is already grappling with high unemployment, estimated at up to 95 percent — which has forced many, including university graduates, to resort to street vending for a living.
Zimbabwe is currently without balance of payment support from multilateral and bilateral financial institutions and donors due to huge debt arrears and a dismal repayment record.