Minister Gorden Moyo has assured potential investors that the time is right to come back to Zimbabwe.
(Image: New Zimbabwe)
Runaway inflation towards the end of the previous decade saw the introduction of banknotes of huge denominations, which in reality were worth little. The one hundred trillion dollar note is valued at about US$5.
(Image: Wikimedia Commons)
The forums, hosted by banking giant Nedbank, known for its progressive attitude towards investment, and the New Partnership for Africa’s Development (Nepad), aim to bring together business leaders who will collectively help to drive investment across the continent.
Moyo, who has held the post since June 2010, did not mince words when he described his country’s struggle to emerge from years of full-blown economic recession and the effects of the accompanying hyperinflation that gripped Zimbabwe in 2008 and 2009.
“It was a nightmare,” he said. “But three and a half years later, since the formation of the inclusive government, the economy has stabilised and in fact, has grown between 2009 and 2011.”
The adoption of the South African rand and the US dollar as currencies of choice, after the value of the Zimbabwe dollar plummeted to nothing, has also halted the economic slide.
In 2012, Moyo said, the country’s growth slipped back a little, but with the prevailing economic climate around the world, it is not the only country to have done so.
There are generally five accepted methods of harnessing resources for the national treasury, he said. “They are foreign direct investment, exports, outside development aid, credit lines, and taxation. At the moment we are only capable of the last method, but with 90% unemployment, most of our people have turned to the informal sector to earn a living, and the informal sector is not formalised or monitored.”
Accordingly the government spends 70% of its budget on salaries with just 30% going to capital expenditure – “no country can grow in this kind of situation.”
However, Moyo said Zimbabwe is ready for regional and international investors to help rebuild the country.
“There are great opportunities here. Our infrastructure – railways, airlines, communications and energy – all need to be revived, and it must happen no matter which party comes into power.”
The government doesn’t have the resources to tackle these major reconstruction projects alone, he said, and it’s calling for private-public partnerships to play a role.
“We invite investors to come to Zimbabwe. Besides the infrastructure work, we aim to privatise some parastatals, and this too presents an opportunity for investors. We have 78 parastatals that are wholly owned by the government, and now we want to reduce our shareholding because at the moment they are of no use to the economy or to the people.”
Asked about the country’s controversial indigenisation policy, which stipulates that foreign-owned companies transfer a 51% shareholding to locals, Moyo replied that it is a noble policy that has been incorrectly implemented.
“New investments are supposed to be exempt,” he said, adding that the Act has instead been used for political purposes.
“Its implementation is against the law, against the Act itself. We must empower our people,” he said, “but at the moment the policy is benefiting rich individuals. The problem lies in the modus operandi, but if it is implemented properly the people as well the investors will reap the benefits.”
In September 2012 the country’s minister for economic planning and investment promotion, Tapiwa Mashakada, said that the policy was not compatible with Zimbabwe’s call for foreign investment, and that there were two options the government was likely to consider – that the policy be reviewed, or that it be temporarily suspended.
A new Constitution
Zimbabwe is also finalising its new Constitution, said Moyo, and the draft document is about to come under parliamentary scrutiny, after which the government will launch a public awareness campaign.
“Although there were a few contentious issues,” he said without elaborating on what those were, “this Constitution is going to be the political, cultural and economic glue that will hold the country together and give us a fresh start.”
Before the Constitution comes into effect, he added, there must be a referendum on the adoption of the document – which the country can’t finance as it has no resources. Zimbabwe was looking to other African countries for assistance in this regard, he said.
“After the referendum come the elections. We are confident that the results will be credible,” said Moyo with an air of optimism, “and that the proper procedures such as voters’ roll, observers and a clampdown on violence, will be in place.”
The Constitution, he said, would protect investors.
“It will reign supreme – we can’t go back to 2008.”
Moyo also announced that the government is amending its procurement policy, which will speed up procedures that currently can take up to a year from application to implementation.