The Future of Zimbabwe
By: Prepared by Mike Moon - World Economic Forum
Posted: Sunday, May 9, 2010 3:48 pm
THIS session brings together the three leaders of the Government of National Unity at a critical moment in Zimbabwe’s history. With progress being made in reconciling historic differences, Zimbabwe's economy has shown signs of recovery largely driven by the introduction of dollarization in January 2009, which helped to stabilize inflation and increase investment.
(However, concerns remain as to the cohesion of the current government. The recent indigenization bill passed in parliament has caused concern for both international and local businesses.)
What is the future of Zimbabwe under the current Government of National Unity, and how are investors and businesses adjusting their operational strategies to recent developments?
This session is on the record.
Key Points
• Zimbabwe’s Government of National Unity has declared a unity of purpose and direction and says much progress has been made in reconciliation between former adversaries
• The government is calling for the removal of targeted sanctions against selected individuals in the administration, saying this is essential to attract much-needed investment
• The controversial “indigenization” programme of transferring control of foreign-owned companies into Zimbabwean hands is said by the government to be essential to prevent Zimbabwe’s people being onlookers in their own economy – though its implementation is still under discussion
• The economy has been stabilized through dollarization and new economic policy frameworks are being put in place
• There are a number of positives for potential investors in Zimbabwe, but also perceptions of risk arising from policy uncertainty
• Preparations are being made to ensure that the results of future elections will not be contested – as happened in 2008
Synopsis
Political leaders in Zimbabwe are working together to turn around the country’s economy, which shrank by about 50% in a decade. While there are differences of opinion on detail, there is a willingness to progress.
The government says the fact that certain people in the coalition cannot travel abroad due to targeted sanctions imposed by Western governments does not acknowledge or endorse the progress that is being made in Zimbabwe and, therefore, creates the impression among potential investors that the country is dysfunctional and an international renegade. Factory plant companies and arms manufacturers are also refusing to provide spare parts for Zimbabwe’s ageing machinery and weapons systems.
The unity government has been working on what it terms “stabilization economics” and is now concentrating on growth economics, which it says require sanctions to be removed. The Southern African Development Community, the African Union and its neighbour South Africa have all called for an end to sanctions.
The indigenization programme is seen by the government as an essential empowerment strategy for the people of Zimbabwe, confirming their ownership of all aspects of the country following colonial rule. However, while they might support its intentions, Zimbabwean business people believe it sends out the wrong message to potential investors. It was stated in the session that empowerment of the citizenry through indigenization does not constitute nationalization of private companies. Discussions are underway to try to ensure that it is applied in a broad-based way, benefiting as many people as possible and avoiding an elitist exercise. A framework could be established to set sector-by-sector thresholds for local ownership to avoid a one-size-fits-all rule for the transfer of shareholding – though some elements in the government have said 51% local ownership will apply generally.
Dollarization of the currency has halted rampant inflation and the government is working hard to create a welcoming environment for foreign investors. Policy consistency and certainty are preoccupations of the administration. Local companies might well be undervalued and present attractive opportunities to those who ignore risk warnings and take the plunge by investing in Zimbabwe. Likely return on investment is higher than in most countries in the region.
From an investor’s perspective, Zimbabwe might not present a particularly large market, or currently have the levels of economic growth available in other countries on the continent, but it does have some competitive advantages. Foremost among these is a well-educated population that provides rich managerial potential. Also favourable is the large number of good companies that have come through tough times in lean, mean shape. While dollarization has stabilized the currency, perceptions of macroeconomic instability remain. These are mainly the result of policy uncertainty, which makes it difficult for investors to make earnings projections.
While the government is currently displaying a show of unity, many Zimbabweans are concerned about what will happen when new elections are called – dissolving the unity pact and throwing political parties into opposition with each other again. The government said a future election date had deliberately not been set as the country is in a healing phase that might be destroyed by going into election mode. Negotiations will try to level the electoral playing fields to ensure that voting results cannot be disputed.
Runa Alam, Chief Executive Officer, Developing Partners International, United Kingdom
Kuseni Douglas Dlamini, Chief Executive Officer, Old Mutual, South Africa; Co-Chair of the 2010 World Economic Forum on Africa; Young Global Leader
Shingi A. Munyeza, Group Chief Executive Officer, African Sun Limited, Zimbabwe
Robert G. Mugabe, President of Zimbabwe
Arthur G. Mutambara, Deputy Prime Minister of Zimbabwe; Young Global Leader
Bongani Ncube, Global Changemaker
Morgan Tsvangirai, Prime Minister of Zimbabwe
Moderated by
Julie Gichuru, Group Digital Business Manager and TV Host, Royal Media Services, Kenya; Young Global Leader
Klaus Schwab, Founder and Executive Chairman, World Economic Forum
Contributors
Runa Alam
Kuseni Douglas Dlamini
Shingi A. Munyeza
Bongani Ncube
Julie Gichuru
Klaus Schwab
Robert G. Mugabe
Arthur G. Mutambara
Morgan TsvangiraI
Labels: WORLD ECONOMIC FORUM
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GPA principals blast sanctions
By Hebert Zharare recently in DAR-ES-SALAAM, Tanza
THE three leaders of the inclusive Government unanimously told the 20th World Economic Forum on Africa in Tanzania on Thursday that no significant economic growth will be realised in Zimbabwe if illegal Western sanctions are not immediately lifted.
In his address to the WEF on Africa, Prime Minister Morgan Tsvangirai, who was leading a team of Zimbabwean business executives, said
the West should only be guided by what Zimbabweans said.
He said Zimbabwe was safe for investment and business should not fear the Indigenisation and Economic Empowerment Act and its accompanying regulations.
"It does not make sense that some people from the same Government are not able to travel to some countries at the same time because of sanctions. Such a stance is not an endorsement of what we are trying to do in Zimbabwe. You must get guidance from what we are saying, not from what you believe or think about us," PM Tsvangirai said.
President Mugabe — who was in Dar-es-Salaam to attend a summit of Southern African liberation parties — was not billed to address the forum.
However, WEF founder and executive chairman Mr Klaus Schawab invited him to address the gathering.
The President’s arrival caused quite a stir as businesspeople and the media jostled to get a chance to speak to him.
Addressing the forum, President Mugabe said among all the countries that imposed sanctions on Zimbabwe, the Americans were the most honest because they made it clear that their embargoes went beyond personalities as they also blocked financial assistance.
He lambasted those who claimed the sanctions were targeted at Zanu-PF alone.
"Zimbabwean industries are driven by European technologies and the sanctions mean all these companies will not function," he said.
Britain internationalised its bilateral dispute with Zimbabwe over land, leading to the EU imposing the illegal embargo.
Responding to a question from a British journalist on the effects of the sanctions, President Mugabe said Air Force of Zimbabwe Hawk fighter jets, bought from Britain at the former UK Prime Minister Margaret Thatcher’s recommendation, were grounded because of the sanctions.
In his address, Deputy PM Arthur Mutambara said: "Assume that the sanctions are targeted, but the impact is still felt on the whole country. The sanctions must go today in total. We do not need them."
PM Tsvangirai defended the indigenisation law saying it had been misconstrued as a tool to nationalise foreign-owned companies.
He said there was a lot of "hot air that had been blowing about indigenisation".
"Economic empowerment of the country’s citizens does not mean nationalisation of companies.
"We have the framework which sets the thresholds sector by sector," he said.
PM Tsvangirai said some Western investors were afraid of non-existent threats.
He made a comparison with Kenya, saying progress in Zimbabwe was more impressive, yet the West was pumping millions of dollars into the East African country.
"There are greater risks in Kenya than in Zimbabwe. How do you explain that? Capital must be bold and not behave like cowards," he said.
DPM Mutambara concurred and invited investors to flock to Zimbabwe.
President Mugabe told the delegates that for over a century, the British ruled the country and siphoned its resources and it was time indigenous people had a shot at improving themselves.
"Investors should come with the spirit of sharing with our people. We are not chasing away some investors, we are only asking for a fair share of the investment.
"In our view, a fair share of 49 percent is good enough," he said.
President Mugabe chronicled Zimbabwe’s history and said the idea of working together was not new.
He explained how Patriotic Front parties worked together before 1980 and how former Rhodesians were incorporated at independence.
"It was not difficult to reach out when the idea of the inclusive Government was discussed.
"In fact, working with other people did not start yesterday; it is ingrained in our parties. After the recommendations of Sadc we started discussing and discovering each other.
"In the beginning, we did not trust each other at all, we thought we would kill each other but it’s all over now.
"Yes, we have political differences, but we have this alliance," he said.
PM Tsvangirai said his differences with President Mugabe were once "legendary".
"Once the Sadc facilitation work began, we realised that there is no winner in a losing team.
"We declared peace and Zimbabweans supported it. This inclusive Government is not fragile; when we differ, we differ respectfully," he said.
Responding to Africa Sun chief executive officer Mr Shingi Munyeza — who wanted clarification on when Zimbabwe would have elections — PM Tsvangirai said it was premature to stage a poll.
"We have deliberately avoided announcing the dates for elections because we do not want the country to be in election mode again.
"We do not want to pit the election mood against national healing mood. We have some processes such as the constitution-making that are yet to be completed.
"When time comes, a date will be set through consensus. The important thing is that the inclusive Government is working and policies and decisions are being made by consensus," he said.
The 20th WEF on Africa ran under the theme "Rethinking Africa’s Growth Strategy".
Over 1 000 political leaders and business executives from 85 countries met to seek ways of attracting investment in Africa.
Labels: GLOBAL POLITICAL AGREEMENT, SANCTIONS, WORLD ECONOMIC FORUM, ZDERA
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'Trade among yourselves' : African countries advised to create economic buffers
By AFP and Sapa
Thu 06 May 2010, 09:20 CAT
INTER-CONTINENTAL: Ajai Chowdhry, chairman of India's HCL Infosystems, Sasol CEO Pat Davies, Anna Tibaijuka, executive director of UN Habitat, Joergen Ole Haslestad, president of Yara International in Norway and Old Mutual CEO Kuseni Douglas Dlamini at the 20th World Economic Forum on Africa in Tanzania Picture: THOMAS MUKOYA/REUTERS
African countries must
restructure their economies and boost trade among themselves to ride out economic storms, a World Economic Forum economist said yesterday.
Jennifer Blanke, a senior economist with the forum - whose discussions on Africa opened in Dar es Salaam, Tanzania, yesterday - said Africa could insure itself against the effects of another global meltdown by improving infrastructure, governance and financial institutions as well as adopting new technologies.
"These are the issues that will enhance Africa's growth potential and prepare African economies more to face any kind of disruption," Blanke said.
She said the limited effect of the slowdown on African economies was a short-term advantage.
"The lesson is to strengthen your economies so that when this happens again - and it will - you are better placed to ride out the storm."
Although Africa was spared much of the ravages of the global downturn, there was increased pressure on the continent from reduced trade, declining remittances and dwindling foreign investment.
"What really affected Africa was a decline in demand and a decline in prices that Africa was getting for its goods. If Africans are buying more of their own stuff then you have less of a concern over demand from other parts of the world," said Blanke.
Eleven African heads of state and government, including President Jacob Zuma, are attending the 20th World Economic Forum on Africa, to discuss strategies in the aftermath of the economic downturn.
Zuma is accompanied by Finance Minister Pravin Gordhan, Science and Technology Minister Naledi Pandor, Water and Environmental Affairs Minister Buyelwa Sonjica, Trade and Industry Minister Rob Davies, Agriculture, Forestry and Fisheries Minister Tina Joemat-Pettersson, and Economic Development Minister Ebrahim Patel.
South African business leaders are also at the meeting.
Tanzanian president Jakaya Kikwete said: "Africa is a continent full of potential. Africa has been growing despite the economic instability that is facing the world today."
Ethiopian Prime Minister Meles Zenawi, Kenyan Prime Minister Raila Odinga and Rwandan President Paul Kagame are at the forum, along with Mozambique's president, Armando Emilio Guebuza, Gabon's Ali-Ben Bongo Ondimba, Zambia's Rupiah Banda and Zimbabwe's prime minister, Morgan Tsvangirai.
Zuma was to address a South African dinner hosted by the World Economic Forum last night.
He will also address the closing plenary session tomorrow on "The redesign of Africa's role in a new global economy", the Presidency said.
The World Economic Forum is a Swiss-based foundation that gathers world and industry leaders for talks on political and economic problems. - timeslive.co.za
Labels: DAR ES SALAAM, REGIONAL INTEGRATION, WORLD ECONOMIC FORUM
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World Economic Forum on Africa invites Maureen
Written by Florence Bupe
Tuesday, January 13, 2009 9:47:16 AM
THE World Economic Forum on Africa has invited former first lady Maureen Mwanawasa to participate in this year's World Economic Forum to be held in Cape Town in June.
According to an invitation letter addressed to Maureen and jointly signed by forum director Katherine Tweedie and managing director Borge Brende, Maureen has been invited in her capacity as the founder of the Maureen Mwanawasa Community Initiative (MMCI).
This year's forum is being hosted under the theme ‘Uniting Africa's Champions’, and the agenda would focus on Africa's opportunities despite the global economic transformation.
“The agenda aims to highlight leaders in business and non-business endeavours whose example demonstrates the resilience and incisiveness required in changing world. We welcome your thoughts and guidance on this preliminary agenda,” the invitation read in part.
The forum also provides African and world leaders an opportunity to jointly address the strategic challenges that require multi stakeholder solutions.
Labels: MAUREEN, WORLD ECONOMIC FORUM
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