Business seeks assurance on Zim investments
SOUTH African business leaders are expected to seek clarification over Zimbabwe’s investment climate at today’s meeting of the SA-Zimbabwe Business Forum despite assurances yesterday that Zimbabwe is open for business.
Zimbabwe and South Africa enjoy strong economic ties, with trade between the two countries growing, although Zimbabwe has become a net importer of finished products from its southern neighbour.
Most South African firms, feeling the pinch of growing competition back home, have looked to expand north and companies such as Pick n Pay, Standard Bank and Nedbank are even ramping up their operations in Harare.
Despite the opportunities for growth that Zimbabwe offers for South African companies, investors in the mineral-rich southern African country have complained of the country’s indigenisation policy which seeks to give control of foreign companies to black people.
Corporate leaders from the two countries will today engage with President Robert Mugabe and President Jacob Zuma at a meeting of the business forum.
“It’s a meeting we think will enable us to raise our concerns regarding impediments to investing in Zimbabwe.
“Having both Zuma and Mugabe as well as cabinet ministers from Zimbabwe will provide us with ready answers and positions we hope will be maintained and not changed at a later stage,” a corporate executive attending today’s forum told Business Report.
Indigenisation has always been one of the major worrying factors for investors seeking exposure to Zimbabwe, which already is host to South African companies such as Impala Platinum (Implats), Aquarius Platinum, Metallon Gold and PPC.
Other worries for Zimbabwean investors include high taxation and fears over respect for property rights after the government took over about 27 000 hectares of land claims belonging to Implats’ unit in the country, Zimplats.
Mugabe explained yesterday that his government was stick- ing to its indigenisation policy but said the 51 percent that foreign companies should cede to black Zimbabweans was negotiable although this flexibility was not applicable for the mining sector.
He said the empowerment policy was flexible for jointventure partnerships, where ownership would be equally distributed. Friendly countries could also be given preferential treatment.
“But with our friends on a joint basis, provided it’s on a reciprocal basis, we can negotiate for a 50/50. “We can have an arrangement on companies that operate on both sides. That principle applies on a regional basis to each other.” – Tawanda Karombo EGYPT had its credit rating raised at Moody’s Investors Service for the first time in more than two years, citing political stability and an improved business environment.
Moody’s raised Egypt’s issuer and unsecured bond ratings one level from Caa1 to B3, six levels below investment grade. The company said it expected the Egyptian economy to grow by 4.5 percent in the current fiscal year that ends in June, largely in line with the government’s forecast.
“This expected level is based on an assumption that domestic political stability will continue, as will improvements in the business environment, which in Moody’s view will be conducive to higher investment levels,” it said in a statement.
Moody’s action follows upgrades from Standard & Poor’s and Fitch Ratings, and comes as Egypt prepares to return to the international bond market for the first time since 2010. The government said on March 26 it had hired seven banks to help sell a $1.5 billion (R17.7bn) bond.
The Egyptian economy is showing signs of recovery after Gulf Arab monarchies extended billions of dollars in aid to help President Abdel-Fattah el-Sisi stabilise the country, which has suffered from political turmoil since the 2011 uprising that toppled Hosni Mubarak. El-Sisi won the presidential election last year after leading the ouster of Islamist president Mohamed Mursi in July 2013.
The rating company also assigned a stable outlook to Egypt, meaning that pressures for a rating downgrade were limited, citing support from Egypt’s oil-rich Gulf allies.
Meanwhile, Egypt’s stocks fell after the finance ministry issued regulations for a capital gains and dividend tax, overshadowing optimism over the rating upgrade.
The EGX 30 index lost as much as 1.9 percent before trading 0.4 percent lower at 8 680.31 points at 11.01am in Cairo. EFG-Hermes Holding, the largest independent Arab investment bank, led the retreat with a 0.5 percent decline. – Bloomberg