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Despite rich resources, questions about private property frighten investors.
Tsvangirai noted that other countries such as Botswana require foreign companies to have local investment. “It is about citizens’ empowerment, not expropriation,” he said.
Stefan Hayden, president and CEO of Caledonia, a Canada-based company that operates the Blanket gold mine south of Bulawayo, told investors in a recent conference call that despite revisions to the indigenization law, “we still believe that the existing requirements are un-commercial and impractical and in their present form are continuing to deter foreign investors.”
“If the Zimbabwean government expects its mining industry to grow, it should rapidly resolve all the issues around indigenization in a manner which does not discourage international investors,” Hayden said.
Another major concern for investors is the potential instability during the next two years, with a general election coming up. Before the next election can be held, a new constitution must be completed and put to citizens in a referendum. Dates have not been set, but the referendum is expected to take place in May or June of 2011.
Other deterrents to investment in Zimbabwe include crumbling infrastructure, crippling electricity shortages and the “brain drain,” caused by millions of well-educated Zimbabweans leaving the country to seek work abroad.
The World Economic Forum, in its latest Global Competitiveness Rankings, rated Zimbabwe 136 of 139 countries, due to major concerns about property rights, as well as the quality of health care and low educational enrolment rates.
It would be a “mistake” for companies to think they can come into Zimbabwe and make money in the next year or two, said John Legat, chief executive of Imara Asset Management, in a panel discussion. “Our horizon in Zimbabwe is 10 years.”
Chinese investors, notably absent from the conference, are already heavily invested in Zimbabwe, especially in the agricultural areas of tobacco and cotton, as well as chrome, platinum and diamonds.
“Whether Europeans like it or not, China is going to be the biggest consumer for our commodities,” said Andrew Cranswick, a Zimbabwean and the CEO of African Consolidated Resources.
“If you’re not invested yet, you may be too late,” Cranswick said. “There are seven flights a day from Johannesburg to Harare, all of them full.”