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Zimbabwe: Can it attract investment?

Despite rich resources, questions about private property frighten investors.

Zimbabwean gold miners
Gold miners shovel ore for panning in Zimbabwe. (John Moore/Getty Images)

JOHANNESBURG, South Africa — Mention Zimbabwe and immediately images of violence, chaos and collapse are conjured up.

Under the thumb of President Robert Mugabe, 86, the country is shattered by years of farm invasions, hyperinflation, political violence, corruption and food shortages.

But now, 18 months into a power-sharing agreement with Mugabe’s ZANU-PF, Prime Minister Morgan Tsvangirai and his party are trying to lure foreign investors back to Zimbabwe and rebrand the country as open for business.

“We are making progress. Zimbabwe is moving forward, from the darkness of madness and self-destruction to the dawn,” said Tsvangirai, addressing a conference on the future of Zimbabwe in Johannesburg on Thursday.

He cited the “tangible” progress of medicines available in hospitals, food for sale at supermarkets and water in the taps. Tsvangirai also pointed to the country’s single-digit inflation and expected growth rate of 7 percent this year.

“Does this mean that the madness of previous years has been eradicated? No,” he said. “The failed policies of the past continue to haunt us. Disdain for the rule of law and property rights continues to undermine our reputation as a safe investment destination.”

Tsvangirai highlighted Zimbabwe's potential in tobacco production, and the country’s “vast, untapped mineral resources, from natural gas to diamonds and platinum,” as well as coal and gold.

“Despite the challenges we face, we need committed investment partners to join us in unlocking Zimbabwe’s potential,” he said.

The conference in Johannesburg, hosted by The Economist and attended by investors, diplomats and analysts, struck an optimistic tone on Zimbabwe’s future, with Tsvangirai’s team making a largely upbeat pitch for the country as an investment destination.

“I think this conference demonstrates that Zimbabwe is back,” said Tapiwa Mashakada, minister of economic planning and investment promotion. “We are back.”

He said Zimbabwe is taking its cues from Mauritius, ranked by the World Bank as the easiest country in Africa in which to do business. “We want an investor to be able to come to Zimbabwe and get all required papers and permits in two days,” he said enthusiastically.

But Zimbabwe has a long way to go to become investor-friendly. It is ranked 159th of 183 countries on the World Bank’s index. Mauritius is 17th.

Tsvangirai and his team were forced to spend much of their time defending the country’s controversial new indigenization law that requires companies valued at more than $500,000 to sell black Zimbabweans a 51 percent stake within five years.

The law, on the books since 2004, has drawn comparison to the land reform under Mugabe that saw thousands of white farms violently invaded and seized. Tsvangirai’s Movement for Democratic Change party is working to modify the law to make it more palatable to investors.

Tsvangirai, seeking to reassure nervous investors, emphasized that 51 percent is a long-term goal, and in the short term, companies would only be required to meet minimum thresholds that would vary by industry sector and are currently being negotiated — for example, in mining, local ownership could start at 10 percent.