Mnangagwa catches eye of UK cash

President Emmerson Mnangagwa and UK Africa Minister Harriett Baldwin

In the nearly seven months that Zimbabwe’s President Emmerson Mnangagwa has been in charge, he has battled to turn around a battered economy and match the high expectations of ordinary citizens at home.

Abroad, however, Mnangagwa has scored a significant victory – a thaw in relations with Britain.

Relations between Harare and London, which have been frosty for the past 20 years, are at a new high.

The falling-out between the two countries was sparked by a disagreement in 1997 on land compensation.

Last week, Mnangagwa hosted a 22-member British delegation from Invest Africa, a London-based firm representing 21 organisations in mining, tourism, infrastructure and energy.

Robert Hersov, the chairman and CEO of Invest Africa, said the mood was positive among investors and it was always “better to get in early” before the rush of capital.

Mnangagwa said he had informed the investors that this was a record delegation for his time in government, which he entered in 1980.

“It is almost 38 years now. I have never seen such a huge delegation, very diverse, very global, coming together to little Zimbabwe in Southern Africa,” he said.

The British companies that have operations in Zimbabwe include Standard Chartered Bank, Atlas Mara’s Banc ABC unit, British Airways, Anglo-American and cigarette manufacturer British American Tobacco.

Farhad Nathoo, CEO of the British Business Association in Zimbabwe, said although business still faced challenges such as foreign currency shortages, there had been renewed interest in Zimbabwe lately from Britain.

“The climate has changed and Zimbabwe is now the place to come and have a look. It’s not only delegations that are coming in, but we are receiving emails and calls from investors keen to find out [more about the country].

“The interest is in mining, agriculture and infrastructure. There are lots of engineering firms watching to see what tenders are coming out as the government wants to revive infrastructure across the country,” he said.

The mending of relations with London appears to be a key concern for Mnangagwa and is a departure from the frosty relations under his predecessor, Robert Mugabe.

Mugabe was frustrated by the former colonial master’s reneging on an agreement on land compensation, and relations soured on his watch.

The lowest ebb was when Mugabe withdrew Zimbabwe from the Commonwealth in 2003.

The change of tack under Mnangagwa is clear. He is determined to oversee Zimbabwe’s return to the international community.

Last month, Mnangagwa wrote to the Commonwealth seeking the country’s re-admission to the 53-member body, after a 15-year absence.

Foreign Affairs Minister Sibusiso Moyo has visited London on a charm offensive aimed at the UK government.

Political observers said the winning over of Britain by Mnangagwa was intended to lead to acceptance by the broader Western community.

Since Mnangagwa’s rise to power in November last year, the number of visitors from London beating a path to Harare, scouting for investment and to assess the political climate, has increased.

Some of the high profile visitors have included UK’s Minister of State for Africa Harriett Baldwin, Lord Peter Hain and British MPs.

In a recent research note, NKC African Economics said Zimbabwe officials had reiterated that the country was “open for business” and this was “reflected by the number of recent high-profile in-country visitors” and in Zimbabwean envoys’ persistent attempts to woo investors abroad.

“Noteworthy policy developments in Zimbabwe’s mining sector over the past few months have provided some encouragement as to what can be expected from this new administration. Zimbabwean politics is still a main point of interest, with the political focus shifting to general elections, due before end of July,” it said.

“ZANU-PF is likely to win the poll despite continuing division in the party and there will be some uncertainty over the legitimacy of the vote amid signs of localized rigging…We have had no reason to change our growth forecasts and we expect an economic contraction this year. Thereafter, GDP growth is expected to turn positive as the economy recovers in the medium term”.

Tara O’Connor, director of London-based Africa Risk Consulting, said Zimbabwe was a viable investment destination for Britain, despite the principal risk of the country’s politics, which had for so long been anathema to investment.

“The infrastructure remains reasonable; people are highly educated and skilled, although many skills have been forced abroad to the benefit of South Africa, Botswana and Britain.  Zimbabwe has the advantage over other countries in that it has a comparatively deep capital market and a healthy stock exchange with several companies triple-listed,” she said.

Other observers intimate that the impact of Brexit could also be fuelling the new romance between London and Harare, as the former seeks new markets.

Robert Besseling, director of Exx-Africa, a business intelligence firm, said that on the back of Brexit, the UK government, it seemed, was placing trade interests above payment of arrears in its fast improving relationship with Zimbabwe.

“The UK’s stance diverges from the position of the International Monetary Fund and some European Union countries, like Germany, which insist that any new loans would need to be contingent on settling $9.4 billion in arrears. The IMF has also called on public payroll cuts and phasing out of agricultural subsidies. Those opposed to the UK’s policy of rapprochement believe that Zimbabwe’s government is unlikely to fully implement political and economic reforms if it is offered debt write-offs too early,” said Besseling.

“Zimbabwe is becoming a hot topic at international investor conferences across Europe. At a recent export finance event in Prague, investors showed fresh interest to re-engage with Zimbabwe, although the importance of the arrears clearance remains a key condition for European countries, whereas the UK government seems more willing to write off such debts.”

Last month, UK development finance institution, CDC Group and Standard Chartered agreed to lend up to $100 million to growing businesses in Zimbabwe.

The five-year facility will see CDC and Standard Chartered share the default risk on new loans originated by Standard Chartered Bank Zimbabwe. – The Sunday Times

%d bloggers like this: