HARARE A controversial probe into one of the countrys biggest conglomerates that has raised fears the firm could be nationalised and a temporary freeze of bank accounts of another private firm appeared to quickly backfire on Zimbabwes new government after a leading South African retailer walked away from a proposed investment deal. Shoprite, the largest food retailer in Africas largest economy, announced this week that it was halting plans to buy controlling stake in Zimbabwes leading supermarket chain, OK Zimbabwe, citing socio-economic and political uncertainty.
The South African food giant that had been in negotiations with OK Zimbabwe for the past two months was expected to pay over US$20 million for the Zimbabwean retailer.
But it said it was putting on hold any plans to invest in Zimbabwe: Due to the current socio-economic and political uncertainty in Zimbabwe, Shoprite has decided not to engage in further investment opportunities in that country in the short to medium term.
Analysts saw the move by Shoprite as a reaction to Harares decision to order an investigation into financial dealings at Kingdom Meikles Africa Limited (KMAL), a firm with interests spanning several important sectors of Zimbabwes economy but is accused of illegally siphoning foreign currency out of the country.
The investigation has ignited fresh fears over property rights and safety of foreign investments especially because Harare has used similar accusations of illegal foreign currency dealings to seize private firms, while powerful politicians linked to President Robert Mugabes ZANU PF party have also taken advantage to pillage firms placed under investigation.
Harare-based economist Collin Magura said the KMAL probe plus last weeks decision by the Reserve Bank of Zimbabwe to temporarily freeze the accounts of Nestle Zimbabwe after the company announced it would no longer buy milk from a farm owned by Mugabes family were likely to have played a bigger in role to convince Shoprite to stay away from Zimbabwe.
KMAL and Nestle` could have influenced Shoprites decision, said Magura. The issue of property rights is of utmost importance. Failure to guarantee the rights we will not attract investors. What happened in the business sector over the past three weeks had been a tragedy as far as investment is concerned.
University of Zimbabwe political scientist Eldred Masunungure concurred with Magura, saying efforts by the unity government of Mugabe and Prime Minister Morgan Tsvangirai to attract new investment to bolster economic recovery would come to nought for as long as there was no corresponding effort to uphold private property rights.
He said: As long as we have no respect for property rights, we must kiss goodbye to investments. Who wants to invest in a country where government will one day just wake up and say it has nationalised your company and assets?
Post published in: Economy