A United Kingdom organization, British Expertise, says Zimbabwe has a poor investment environment and remains politically unstable for serious investors to pour their money into the country.
In a new report following a visit to Zimbabwe by a British trade delegation to Harare last month, it the organization cites ongoing political squabbles in Zanu PF and the waning Movement for Democratic Change formations as also not inspiring potential investors.
The report titled, Zimbabwe Scoping Report 28 to 31 October 2014, says political stability in Zimbabwe, which is key for the country’s economic recovery, will largely depend on the possibility of a leadership change in Zanu PF should President Robert Mugabe decide to leave office before the 2018 presidential elections.
The report predicts that Mr. Mugabe’s departure could spark a power struggle between possible successors. Justice Minister Emmerson Mnangagwa currently seems to be winning the battle to replace Mr. Mugabe with Vice President Joice Mujuru being dislodged in a move that has seen most of her suspected supporters removed from their party positions.
During the delegation’s visit, tensions were running high in Zanu PF as factions backing Mrs. Mujuru and Mnangagwa battled for political turf.
The Mujuru faction has been on the receiving end with most of its members suspended or fired ahead the party’s congress in December while First Lady Grace Mugabe has urged her husband to fire the deputy president for allegedly plotting to topple him.
According to the report, there will be protracted interparty squabbling in both Zanu PF and the MDC before the next elections.
Zimbabwe Democracy Institute director, Pedzisai Ruhanya, says there cannot be any economic recovery without political stability in the country.
He says it is also important to have political regeneration in the ruling Zanu PF party for economic recovery to take place.
The report also says the Zimbabwean government must clarify its indigenization law which the delegation says is a barrier to potential investors.
Britain is a member of the European Union whose Ambassador t to Zimbabwe, Philipe Van Damme, last week said though the union is engaging the Zimbabwean government, some reforms are urgently needed to align the country’s laws to the constitution as well as clarifying the empowerment law.
Confederation of Zimbabwe Industries president, Charles Msipa, said the findings in the report are consistent with another report following a visit by a Zimbabwean business delegation to European capitals earlier this year.
Msipa said they have since submitted their findings to the Zimbabwean policymakers.
Finance Minister Patrick Chinamasa recently told a conference in South Africa that Zimbabwe is ready to revise the controversial empowerment law to protect foreign investment in the country.
But according to the report, Youth, Indeginisation and Economic Empowerment Minister, Francis Nhema, told the British business delegation that the empowerment law would remain the same and was not likely to be changed or amended in the foreseeable future.
Nhema said the ministry would provide guidance on the law to ensure that its practical implementation is understood by the international business community.
The report adds that though dollarization brought stability into the economy and is expected to last for five or more years, it has created its own challenges.
These are the shortage of capital, lines of credit and lack of liquidity.
While the government would, among other things, use the Zimbabwe Agenda for Sustainable Socio-Economic Transformation to mobilize foreign direct investment and donor finances in whatever form, international investors, be they Chinese or European, would require truly bankable infrastructure projects and clear and a predictable business environment.
The World Bank currently ranks Zimbabwe number 170 out of 189 for ease of doing business. This according to the Bretton Woods Institution’s 2014 Doing Business Report.
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Report By Irwin Chifera on Investment in Zimbabwe