Government policies inspire confidence

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ZIMBABWE now offers immense investment opportunities following the departure of its former president Robert Mugabe who had ruled Zimbabwe for 37 years, a leading American business journal has said.

By Tinashe Kairiza

In an article for the Harvard Business Review titled: What Investors Need to Know after Mugabe, Anna Rosenberg and William Attwell, analysts at the Frontier Strategy Group, said although Harare’s economy was still fragile, Mnangagwa’s policy pronouncements inspired confidence among foreign investors.

As Mnangagwa’s economic reforms gather momentum, the Harvard Business Review noted Zimbabwe’s economy would begin to recover gradually.

“For companies willing to take on some risks, now is the time to buy local assets, which, though priced in US dollars, are still fairly cheap because of the associated risk,” reads the article.

“As Mnangagwa’s reforms begin to gradually stabilise the economy, significant opportunities will emerge across an array of sectors and segments — both formal and informal — for companies hoping to expand in this relatively under-served, but high-potential market. Mnangagwa’s first actions in office underscore how important he views economic recovery.”

Zimbabwe’s proximity to South Africa, one of Africa’s largest economies, also presented investors with an opportunity to make incursions in the Sadc region. “Plus, Zimbabwe’s geographic proximity to South Africa makes the country fairly accessible,” the Harvard Business Review noted.

The journal said Zimbabwe’s retail, telecommunications and agriculture sectors presented investors with low hanging fruits, but noted the debilitating cash crisis in the local economy was an urgent problem that Mnangagwa’s administration needed to urgently resolve.

Mnangagwa’s government, wrote the Harvard Business Review, also has to prioritise rehabilitating the country’s shambolic infrastructure.

“Looking to the longer-term, Mnangagwa’s administration will look to upgrade areas such as the country’s degraded infrastructure and poorly-equipped public health system, which have both suffered due to lack of funds. Technology solutions that help accelerate improvements of Zimbabwe’s decaying infrastructure will also be in high demand,” the business journal notes. It added that Harare’s huge external debt obligations also needed to be settled, if the country was to access fresh credit lines.

Zimbabwe’s external debt stands at US$7,2 billion.

“Moreover, having regularly defaulted on its debts, few international institutions are willing to lend to the government, forcing it to rely on poorly capitalised local banks. Progress on resolving these issues will be slow and incremental. While these measures will provide some temporary relief, accelerating growth will require Mnangagwa to convince institutions like the African Development Bank and the World Bank (to whom Zimbabwe still owes US$ 1,7 billion in arrears) that the government is now a reliable borrower.” – ZimInd