Zimbabwe business warns Mnangagwa

Businesses have issued a stern warning to the government to effectively deal with a “poisoned political environment” which has the potential to scare away investors.

In its submissions for the 2021 National Budget, the Confederation of Zimbabwe Industries (CZI) called for the authorities to get rid of the “poisoned political space”.

“The political arena is poisoned and does not encourage productive engagement that leads to national development for the betterment of the general populace,” CZI said.

“This should be addressed as a matter of urgency so that economic agents concentrate on growing the national cake.”

Zimbabwe’s political landscape has remained highly polarised with the country’s two biggest political parties ZANU-PF and MDC-A locked in an impasse over a possible dialogue to resolve the political crisis.

Zimbabwe is struggling to extricate itself from economic woes and requires much foreign direct investment (FDI).

There are also fears that Zimbabwe’s economy could contract by double digits this year.

Potential investors are shying away the country partly due to the intolerable politics and inconsistent policies.

Mining sector executives also have low perception on political and country risk, according to the State of the Mining Industry Report, Prospects for 2021 released yesterday.

“As was the case for 2020, mining executives remained slightly less confident about the political situation and country risk, with 80% of respondents expressing pessimism about prospects of an improved situation for 2021,” the report said.

The call by CZI comes at a time when President Mnangagwa’s administration is tightening screws on critics, including banning civil society from staging anti-government protests at international fora and unauthorised communication by private citizens with foreign governments.

Government believes protests have gone beyond the scope of freedom of assembly and demonstrations.

But critics say such measures will see Zimbabwe regressing to the old past which will isolate the country from the international community.

This comes after the arrests of activists in the run up to the July 31 demonstration against corruption.

The arrest of activists prompted the Heads of Mission of Canada, Germany, Netherlands, Norway, Poland, the United Kingdom and the United States of America to blame authorities for using Covid-19 as an excuse to stifle citizens’ rights.

CZI said authorities should make concerted efforts to end the “isolation of the country in order to achieve domestic and foreign investment, enhanced trade and unlock financing from international financial institutions”.

Recently, Imara Asset Management Zimbabwe chief executive officer, John Legat said a Government of National Unity could be the tonic required to extricate the economy from its woes.

Government is pushing for reengagement with the international community after it agreed to compensate the former white farmers who were pushed out of the farms during the Land Reform Programme.

More than 4 000 farmers were pushed out of their farms.

But the Zimbabwe National Chamber of Commerce (ZNCC) said “wrong political moves and toxic political space cannot be corrected by compensating former farmers with a whooping US$3.5bn”.

ZNCC said the money should be invested towards agriculture production, instead. “We appreciate that the Global Compensation Agreement is a constitutional issue but believe that this is not a priority at the moment,” ZNCC said.

“We do not believe that International Finance Institutions are not coming on board because of the compensation issue, which makes it not a priority at the moment.”

ZNCC said the government should consider restructuring the compensation agreement rather than trying to raise the finance.

The business grouping recommended that resources should come from farming profits to honour obligations of US$3.5bn.

Zimbabwe’s economic crisis has worsened over the past few years with inflation remaining high and foreign currency shortages escalating.

Analysts say Zimbabwe requires international financial support to reboot the economy which has been hit by the Cyclone Idai and the Covid-19 pandemic. Zimbabwe’s external debt burden stood at US$8.1bn in June this year, while the domestic debt is just over ZWL$12bn, according to Finance Minister Mthuli Ncube.

The external debt has prevented Zimbabwe from seeking cheap lines of credit required to reboot the economy.

At the launch of the 2021 pre-Budget Strategy paper, Ncube disclosed that external arrears are currently estimated to be US$6bn.

Source – businesstimes

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