Zim economic prospects bright, say experts
AN economic recovery that is likely to result from policies pursued by the new political administration in Zimbabwe will likely create “significant opportunities” both in the formal and informal sectors, US-based economic experts believe.
In a joint article for the Harvard Business Review — a 95-year-old US international management magazine — Anna Rosenburg and William Attwell, who focus on Sub-Saharan Africa at information and advisory firm Frontier Strategy Group (FSG), say multinational companies (MNCs) with an appetite for risk and are willing to invest in Zimbabwe “could benefit from firstmover advantages”.
FSG, which is based in Washington DC in the United States, has a broad market of global opinion makers that include audiences of global media outlets such as The Financial Times, The Wall Street Journal, The New York Times, Forbes, Business-Week, Bloomberg, CNBC, Reuters and BBC.
“Mnangagwa is clear that he wants to rebuild the economy and start afresh with foreign businesses. This is promising for a market formerly dubbed the “breadbasket of Africa,” said the pair in a jointly written article.
They however, conceded that the new administration faced a challenging task after the local economy allegedly halved from $8 billion in 1997 to $4,4 billion in 2007.
They said when the reforms that are being pursued by the new administration eventually set in, “significant opportunities will emerge across an array of sectors and segments — both formal and informal”.
It is believed that President Mnangagwa’s first actions in office have given a signal that he is serious about economic reforms.
“Mnangagwa’s first actions in office underscore how important he views economic recovery. Even before announcing his new Cabinet, Mnangagwa installed a key reformist, Patrick Chinamasa, as acting Finance minister, tasked with tackling corruption and re-engaging with international institutions to unlock funds to ease liquidity shortages,” reads part of the article, which was published on December 28.
“The President also announced the indigenisation ministry will be disbanded and the programme scaled back. He has proposed reforms, such as tax breaks for mining firms and commercial farmers, aiming to assist export-oriented businesses and earn Zimbabwe much-needed hard currency.
“Mnangagwa is also taking steps to shift the culture in government towards assisting, rather than inhibiting business.”
President Mnangagwa took over as the country’s second executive President
after Cde Robert Mugabe resigned November 21 last year following a military operation that was meant to pacify a deteriorating political, social and economic environment.
The FSG experts say the resignation was the most significant development in Zimbabwe since it gained independence in 1980.
Most importantly, the analysts shortlist the consumer-facing sector, technology and agriculture as areas that have inherent opportunities for growth when the economy begins to recover.
By deliberately boosting the middle class, the envisaged recovery will promote demand, especially for consumer-facing industries, they say.
They said Zimbabwe’s huge talent pool, most of which is currently working in neighbouring South Africa, provides a resource that can be leveraged to support the country’s economic growth efforts.
They wrote: “Zimbabwe has one of Africa’s strongest educational systems, and consequently boasts an abundance of high-calibre talent, which means it is relatively easy for companies to find locals to run their operations.
“For example, Deloitte expanded its Harare office into a central Africa hub due to the strong talent pool.
“However, in recent years many high-skilled Zimbabweans have emigrated to neighboring South Africa.
“Given South Africa’s stagnating economy, skilled and experienced Zimbabweans could return home as the political environment stabilises and employment opportunities for them expand with an improving economy.”
Fence-sitting investors are understood to be increasingly taking up positions as they angle for local assets, which are largely viewed to be cheap and grossly undervalued despite being pegged in US dollars.
Market watchers say local investor Mr Shingai Mutasa’s recent transaction to consolidate his shareholding in Masawara, which has strategic investments in key sectors of the economy, might be an indication of his favourable view on the future of the economy.