News / Africa

    Economists Predict Bleak Future After Mugabe Re-Election

    Traders work at the Zimbabwe Stock Exchange in Harare, Aug. 6, 2013. The country's stock exchange lost more than $650 million in value after plunging 11 percent on its first trade following the announcement of the country's election results.
    Traders work at the Zimbabwe Stock Exchange in Harare, Aug. 6, 2013. The country's stock exchange lost more than $650 million in value after plunging 11 percent on its first trade following the announcement of the country's election results.
    Robert Mugabe's re-election as president of Zimbabwe last week raised concerns for many economists who believe the country's foreign investment will greatly diminish under the 89-year-old's economic policies.

    Those concerns took on greater significance Monday when the nation’s stock market suffered its largest one-day decline since 2009.

    Harare-based economist John Robertson believes the hopes of business leaders there were quashed when Mugabe took a 61 percent majority of votes last Wednesday in a heavily-criticized election.

    Indigenization concerns

    "I believe the whole business sector was very much hoping for a change that would've led to a different political party with different policies," Robertson said. "And so there's a lot of dismay, and a lot of seriously discouraged business people right now who are wondering what step they can take to survive. And those that were contemplating coming here, I believe that every one of them has decided not to."
     
    Robertson expects investment in Zimbabwe to slow as Mugabe and his ZANU-PF party implement further economic policies aimed at handing foreign business interests over to Zimbabweans.

    The party’s signature policy, called indigenization, aims to transfer the majority share of any business operations to black Zimbabweans without financial compensation. Critics of that policy said it also favors Mugabe loyalists.  

    Mugabe's re-election and ZANU-PF's win of two-thirds of parliament seats seem to be a clear mandate for indigenization to proceed at full pace. The Zimbabwe Stock Market's 11 percent decline Monday appeared to verify the predictions by critics of the policy.

    Zimbabwe endured years of economic turmoil, with hyperinflation making the country's currency almost worthless in 2008.

    Economic upswing

    But the economy stabilized after a conversion to the U.S. dollar and the formation of a coalition government between the ruling ZANU-PF party and the opposition Movement for Democratic Change.

    Over the past few years, Zimbabwe's economy grew, expanding at around nine percent in 2010 and 2011, and five percent in 2012.

    Some analysts, however, sid unwise economic policies could hinder such progress.

    Some experts said Zimbabwe could have a vibrant economy if not for its current policies.

    "Without doubt Zimbabwe would be a very much more enticing place," said Azar Jammine, chief economist at the Johannesburg-based consulting firm Econometrix. "It has a very strong mineral sector unlike South Africa…Zimbabwe to some extent could be regarded much more as virgin territory that has not yet fulfilled its full potential by any means both in term of minerals and in terms of agricultural development."

    The political intent to further indigenize industry and commerce in Zimbabwe could scare investors away.

    "For people looking at investing in Zimbabwe, it’s certainly going to be a short sell for now," said George Nicholls, chief executive of the global consulting firm Pasco Risk Management. "If people are invested, they do face the distinct possibility of having to compromise and do deals, local indigenization deals, under pressure of losing assets for little or no return...The prospects facing potential investors are slim to unattractive."
     
    Investment rose after the formation of the coalition government. From 2008 to 2011, foreign direct investment grew from around $50 million to nearly $400 million. But Robertson said now outside companies will not be eager to hand over a 51 percent stake to Zimbabwean shareholders.

    "The new investors are supposed to bring in 100 percent of the capital, provide 100 percent of the technology, take 100 percent of the risk," he said. "And in turn, in five years time, they are to settle for 49 percent of the equity and, of course, pay taxes on that as well … all of this has been enough to say to every investor 'We're just not coming.'"

    Business benefits

    But while some business might be scared off, others could benefit.

    "I would anticipate an in-swing of people who supported ZANU-PF," said Nicholls, "such as Chinese investors, Indian investors, Russians, the BRICS nations in general, will be looking to take up opportunities there on the basis of the support they've rendered to the Zimbabwe government over the past four years."
     
    At this point, however, it is not clear when or how such investment will be forthcoming.

    You May Like

    Mother of IS Supporter: Son Was Peaceful, 'Role Model'

    Somali-American Abdirizak Mohamed Warsame pleaded guilty Thursday to charges of conspiring to provide material support to Islamic State militants

    Factions Shift as Civilians Die in Syrian War

    Scenario likely only to further confuse military situation on ground and potentially worsen humanitarian crisis that already has grown to epic proportions

    Presidential Hopefuls Woo Minorities, Evangelicals

    Four GOP candidates to speak at forum at Bob Jones University in Greenville, South Carolina

    This forum has been closed.
    Comment Sorting
    Comments
         
    by: Ken Girtz
    August 06, 2013 12:57 PM
    Economists! I recall they predicted Zimbabwe would collapse in 2006. The economy did not collapse although it suffered badly through to 2009 when USD became legal tender and the economic activity stabilised around the currency beyond control of local reserve bank. We have had such predictions on our economy, on our elections and even on life of our President. Some of the predictors actual try to bring about their predictions. We will not counter predict. Instead we will diligently get to work and structure our economy on firm local foundations, for posterity. Those willing to work with us are welcome and I challenge these economists to find better returns on funds invested elsewhere in the world. Smart money to Harare!

    By the Numbers

    Featured Videos

    Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
    Two-thirds of World Faces Water Shortagei
    X
    February 12, 2016 7:31 PM
    Four billion people — or two out of every three on the planet — do not have enough water to meet their basic needs. That is far greater than previously thought, according to a new study that presents a more accurate picture of the problem. As VOA's Rosanne Skirble reports, the findings will help policymakers and the public craft solutions to address the threat.
    Video

    Video Two-thirds of World Faces Water Shortage

    Four billion people — or two out of every three on the planet — do not have enough water to meet their basic needs. That is far greater than previously thought, according to a new study that presents a more accurate picture of the problem. As VOA's Rosanne Skirble reports, the findings will help policymakers and the public craft solutions to address the threat.
    Video

    Video Gateway to Mecca: Historical Old Jeddah

    Local leader Sami Nawar's family has been in the Old City of Jeddah for hundreds of years and takes us on a tour of this ancient route to Mecca, also believed to be the final resting place of Adam's wife, Eve.
    Video

    Video New Technology Aims to Bring Election Transparency to Uganda

    A team of recent graduates from Uganda’s Makerere University has created a mobile application designed to help monitor elections and expose possible rigging. The developers say the app, called E-Poll, will make Uganda's democratic process fairer. From Kampala, VOA's Serginho Roosblad reports.
    Video

    Video As Refugees Perish, Greek Graveyards Fill

    Aid workers on the Greek island of Lesbos say they are struggling to bury the increasing number of bodies of refugees that have been recovered or washed up ashore in recent months.  The graveyards are all full, they say, yet as tens of thousands of people clamor to get out of Syria, it is clear refugees will still be coming in record numbers. For VOA, Hamada Elrasam reports from Lesbos, Greece.
    Video

    Video Russia Bristles at NATO Expansion in E. Europe

    Russian Foreign Minister Sergei Lavrov is meeting Friday with the head of NATO after the Western military alliance and the United States announced plans for the biggest military build-up in Europe since the Cold War. Russia has called NATO's moves a threat to stability in Europe. But NATO says the troop rotations and equipment are aimed at reassuring allies concerned about Russia as VOA's Daniel Schearf reports from Moscow.
    Video

    Video To Fight Zika, Scientists Target Mosquitoes

    Mosquitoes strike again. The Zika virus outbreak is just the latest headline-grabbing epidemic carried by these biting pests, but researchers are fighting back with new ways to control them. VOA's Steve Baragona takes a look.
    Video

    Video Mosul Refugees Talk About Life Under IS

    A top U.S. intelligence official told Congress this week that a planned Iraqi-led operation to re-take the city of Mosul from Islamic State militants is unlikely to take place this year. IS took over the city in June 2014, and for the past year and a half, Mosul residents have been held captive under its rule. VOA's Zana Omar talked to some families who managed to escape. Bronwyn Benito narrates his report.
    Video

    Video Scientists Make Progress Toward Better Diabetes Treatment, Cure

    Scientists at two of the top U.S. universities say they have made significant advances in their quest to find a more efficient treatment for diabetes and eventually a cure. According to the International Diabetes Federation, the disease affects more than 370 million people worldwide. VOA’s George Putic reports.
    Video

    Video NATO to Target Migrant Smugglers

    NATO has announced plans to send warships to the Aegean Sea to target migrant smugglers in the alliance's most direct intervention so far since a wave of people began trying to reach European shores.
    Video

    Video Russia's Catholics, Orthodox Hopeful on Historic Pope-Patriarch Meeting

    Russia's Catholic minority has welcomed an historic first meeting Friday in Cuba between the Pope and the Patriarch of Russia's dominant Orthodox Church. The Orthodox Church split with Rome in 1054 and analysts say politics, both church and state, have been driving the relationship in the centuries since. VOA's Daniel Schearf reports from Moscow.
    Video

    Video Used Books Get a New Life on the Streets of Lagos

    Used booksellers are importing books from abroad and selling them on the streets of Africa's largest city. What‘s popular with readers may surprise you. Chris Stein reports from Lagos.
    Video

    Video After NH Primaries All Eyes on South Carolina

    After Tuesday's primary in New Hampshire, US presidential candidates swiftly turned to the next election coming up in South Carolina. The so-called “first-in-the-South” poll may help further narrow down the field of candidates. Zlatica Hoke reports.
    Video

    Video Smartphone Helps Grow Vegetables

    One day, you may be using your smartphone to grow your vegetables. A Taipei-based company has developed a farm cube — a small, enclosed ecosystem designed to grow plants indoors. The environment inside is automatically adjusted by the cube, but it can also be controlled through an app. VOA's Deborah Block has more on the gardening system.
    Video

    Video Exhibit Turns da Vinci’s Drawings Into Real Objects

    In addition to being a successful artist, Renaissance genius Leonardo da Vinci designed many practical machines, some of which are still in use today, although in different forms. But a number of his projects were never realized — until today. VOA’s George Putic reports.