Business warms up to Mnangagwa’s promises 

Business warms up to Mnangagwa’s promises 

Source: Business warms up to Mnangagwa’s promises | The Financial Gazette February 7, 2018

President Emmerson Mnangagwa

President Emmerson Mnangagwa

ZIMBABWE’S business sector appears to be warming up to the progress being made under the country’s new administration.

However, local business is demanding that President Emmerson Mnangagwa speedily put his plans into action.

The southern African country, home to units of South African companies including Impala Platinum, Sibanye-Stillwater, Nedbank and Tiger Brands, is still struggling to emerge from a prolonged economic meltdown.

Since taking over from Robert Mugabe in November last year, Mnangagwa has brought some optimism that the country’s business and economic fortunes may change.

But economists and investment analysts say investors want to see more action before they commit any new significant capital to projects in the country.

Zimbabwean economist Johannes Kwangwari says the new administration has shown good intentions and a different approach to running the economy. This is in contrast to Mugabe’s confrontational approach with investors, evident in policies such as indigenisation and taking over land from mining companies.

“If the pronouncements can be acted on, we do have a good ground from which to start,” Kwangwari said.

“Although we haven’t seen much meaningful reform on the part of the state’s commitment to fully opening up the economy, the right signals have come through in terms of reducing the burden of indigenisation only to foreign-owned platinum and diamond mining companies,” he said.

Mnangagwa said last week that his mistakes must be singled out at each and every step, so that he can make the necessary corrections – although this is far from his putting words into action.

Executives with investment and fund management companies have told City Press that there is still concern about corruption, slow progress in dealing with government bureaucracy and property rights policies that are yet to be effectively set down in law.

Last month, Mnangagwa released a policy statement, titled Investment Guidelines and Opportunities in Zimbabwe, in which he declares the state’s “commitment to companies that invest in Zimbabwe” and support its economic development.

“Zimbabwe’s economy will be founded on sound market principles and principles of legal protection that encourage and protect private enterprise. The government commits to the protection of all investments from expropriation, or from measures taken that will have a similar effect,” he writes.

The country has been reforming how it does business, which is part of a 100-day plan and involves all government ministries.

Under Mugabe, foreign investors shunned Zimbabwe. UN Conference on Trade and Development data show that foreign direct investment inflows into the country declined from $421 million (R4.9 billion) in 2015 to $319 million in 2016.

At the World Economic Forum in Davos, Switzerland, last month, Mnangagwa called for investment in the country’s travel and tourism sector. He invited fund holders to build golf courses and hotels in return for incentives.

Mnangagwa had a chance to get advice from International Monetary Fund managing director Christine Lagarde. She told him she was pleased with his pronouncements on fixing Zimbabwe’s economy.

The Industrial Development Corporation (IDC) in South Africa said it is looking at opportunities to invest in the country’s fertiliser processing, hospitality and tourism sectors and in agroprocessing.

This week, the IDC of Zimbabwe said it is “inviting expressions of interest for the provision of financial advisory for the investor search and dilution” of its companies.

“The investor is expected to inject additional capital into the business, bring in new technology and access to wider markets for the business,” it said.

Companies such as Zimbabwe’s beer and soft drink producer Delta Corporation, which is owned by Anheuser-Busch InBev, say there are “challenges in the macroeconomic developments in the country”, according to corporate affairs manager, Tsungai Mazani.

However, most of the problems companies are facing in Zimbabwe are industry-wide. These range from steep premiums for the purchase of foreign currency to expensive electricity and other essential services. The government has moved in to reduce its excise duty on diesel and petrol by 7c and 6.5c, respectively.

Business groupings such as the Confederation of Zimbabwe Industries (CZI) are optimistic about a shift for the better in Zimbabwe’s economy.

CZI president Sifelani Jabangwe told City Press Business that utility costs weigh heavily on the cost structure of local manufacturers.

“We expect to see some benefits for industry from things such as the reduction of petrol and diesel duties under the new administration. This is what we have always called for and we hope to start seeing some changes in terms of pricing of products in the next few weeks, but more still needs to be done to completely fix the operational framework for local producers,” Jabangwe said.

From the beginning of February, the Civil Aviation Authority of Zimbabwe will be levying its airport tax on the Air Zimbabwe fee. This is in contrast to the previous scenario, where travellers would pay at the airport on departure.

In addition, the country is on a drive to lure back airlines that had stopped flights, such as Lufthansa –