‘Zim a risky investment destination’

Source: ‘Zim a risky investment destination’ – The Zimbabwe Independent

BY TATIRA ZWINOIRA

ZIMBABWE still has the highest short- and long-term risk in southern Africa due to a continued decline of the country’s political and economic situation.

In its new April 2021 Southern Africa Outlook Report, American financial services firm Fitch Solutions gave Zimbabwe a score of 37,7 and 29 on its short-term political and economic risk indexes, respectively, and 42,8 and 21,2 for long-term.

Scores are out of 100 with higher scores meaning reduced risk while lower scores mean countries are in peril.

“Our Country Risk Index scores countries on a 0-100 scale, evaluating short-term and long-term political stability, short-term economic outlook, long-term economic potential and operational barriers to doing business,” Fitch Solutions said, in its latest report.

Zimbabwe’s score was against a regional average of 58,1 and 41,9 on the short-term political and economic risk index and 55,2 and 41,4 on the long-term comparative.

On Fitch Solutions operational risk and overall country risk indexes, Zimbabwe had a score of 31,5 and 32,3, respectively.

Mauritius had the best short- and long-term economic risk with scores of 54,2 and 55,9, respectively, while Fitch Solutions did not score the country on the political index.

Botswana followed with a score of 71,3 and 51,7 on the short-term political and economic risk index, respectively, and on the long term risk it was 72,4 and 44,1. South Africa was third with a score of 65,8 and 46,9 on the short term political and economic risk index and 61 and 53,2 on the long term index.

Even strife-torn Mozambique had a better score than Zimbabwe with 51,7 and 43,1 on the short-term political and economic risk indexes while on the long-term it was 49,8 and 43,8, respectively.

In an interview, political analyst Eldred Masunungure said politics and economics were intricately linked and the polarisation of political parties had an adverse impact on the country.

“We are in transition; we are not at a point where we have arrived at the destination where the established politics and economy merge and mirror each other. We have transitional politics, fragile politics, and that is mirrored in not only the economy but also the society. It is also mirrored in our diplomacy, our international politics so it is really a question of the fragility of our politics that reflects itself in the fragility of the economy,” he said.

“The degree, the depth of polarisation is such that the MDC thinks in that way whereas Zanu PF thinks in a different way. They differ almost fundamentally, you know in terms of where Zimbabwe must go politically, where it must go economically, where it must go socially, and where it must go diplomatically such that if you have a change of government from say Zanu PF to MDC you will see those changes that we talked about.

“They have a different perspective, a different ideological framework. That deep and wide division between the major political players is what has afflicted Zimbabwe policy making and the economy. As long as we have the fragmented society, we are not likely to see a consensus on the type of politics and economics we have in the country.

“There is greater incentive for investment to thrive in an environment with greater levels of freedom and greater levels of political stability so any laws that might be perceived to be eroding political freedoms, political competitions, political stability then obviously that weakens the confidence that investors have in a particular environment,” economist Prosper Chitambara said

“Confidence is a function of reforms and if reforms are perceived negatively to be eroding freedoms, then obviously that weakens the levels of trust and confidence,” he added