Investment rises, even in the midst of crisis
Posted by CM on September 27, 2008
No one could possibly want to invest in a country with as much bad press as Zimbabwe, could they? The ‘international media’ have been warning anyone who cares to listen that the country’s collapse will happen ‘tomorrow, next week, next month, in the next six months, any day now,’ for close to a decade now.
And the ‘international media’ lovingly, in great detail and as regularly as possible, tells us about the social and economic hardships of life in Zimbabwe in a way they strangely forget to do in war zones like Iraq, where people have not just been experiencing hardships too, but also being killed in their thousands.
So surely no one in his right mind would invest in a country like Zimbabwe, would they? Well, according to a report about worldwide investment trends by the United Nations Development Programme, there are actually are some investors who think the country is a good bet, if only in the medium to long term. The Financial Gazette reports:
Despite the worsening economic conditions in Zimbabwe, a report by the United Nations Conference on Trade and Development (UNCTAD) has highlighted a marked improvement in foreign direct investment (FDI) in the country from US$40 million in 2006 to US$69 million last year.
These investments have, however, not translated in the overall growth of the country’s tottering economy, which means the funds could have been invested on the buoyant financial markets.
UNCTAD’s statistics came as the Zimbabwe Investment Authority (ZIA) indicated an upsurge in enquiries on the back of a political settlement reached between the country’s main political parties — ZANU-PF and the Movement for Democratic Change. “We have seen a serious interest on Zimbabwe in the past few weeks,” said ZIA chief executive Richard Mubaiwa. “Next week in South Africa there will be a conference on investment in Zimbabwe to be held at the Development Bank of Southern Africa headquarters. It shows there is interest on Zimbabwe after the political settlement,” he added.
Confederation of Zimbabwe Industries president Callisto Jokonya revealed yesterday that the industrial representative body was due to meet a foreign investor keen to inject about US$250 million in investments in the country.
For a country of Zimbabwe’s former economic glory and its potential, a rise in investments in two years from $40 million to $69 million may seem impressive in percentage terms, but it is paltry in absolute terms, a mere shadow of the country’s boom times. And as the story guesses, much of this new investment may have been in the speculative financial markets rather than in production. The Zimbabwe Stock Exchange has weathered the country’s many storms to continue to reward investors with good, above-hyper inflation returns.
But it is the trend that is interesting. Instead of investment declining to near zero in response to the unprecedented propaganda, economic and diplomatic onslaught against not just Mugabe’s regime, but against the country itself, there are still some hard-nosed businesspeople who think Zimbabwe is an interesting place to put their money.
This partly illustrates how despite the very real hardships and decline of recent years, Zimbabwe remains more functional in some surprising ways than many ‘non-crisis’ countries that do not have such controversial rulers as it does.
If a convincing political settlement should emerge from the murky recent positions & perks deal between the political parties, the next few years should be very interesting business time in Zimbabwe.