SA investors not put off

HARARE - Political instability, indigenisation rhetoric and wrangling in Zimbabwe's GNU has failed to dampen the appeal which neighbouring South Africa holds for investors, analysts said this week.

Instability in Zimbabwe’s unity government, that prompted a visit last Friday by South Africa President Jacob Zuma, is fanning contagion concerns which are unjustified given South Africa’s accelerating growth, well-developed capital markets and credible economic policies, they said.

“It seems Zuma assumes that instability in Zimbabwe pre-supposes disaster in his country, that is why he is seized with the matter,” political commentator, Ronald Shumba, said. University of Zimbabwe political science professor John Makumbe said Zimbabweans themselves will have to solve the GNU crisis, and Zuma was being led down a garden path by a wily Mugabe. He said last Friday Zuma left with “half-baked promises from Mugabe” and said his visit was a “wild goose chase.” “He cannot force a solution on the leaders,” Makumbe said.

Zimbabwes woes

The recent woes of Zimbabwe, South Africa’s main trading partner, are seen as a key concern to Msholozi. Zuma has already tried to close ranks between President Robert Mugabe and Prime Minister Morgan Tsvangirai, but has failed. Zuma seems to be the lone voice in the SADC wilderness, and his partners in the SADC Troika seem uninterested in confronting Mugabe and calling him to order.

An increasingly confident Mugabe is demanding an election as a sign of his resentment to the GNU. Buoyed by revenue from diamonds and an indigenisation campaign gimmick, Mugabe is overly confident of winning elections. But Zuma has warned against a radical, populist, indigenisation policy being pursued by Mugabe that has also affected South African businesses and farms in Zimbabwe.

The indigenisation policy has hit Zimbabwe’s investment status hard, but has failed to slow down the strengthening South Africa currency. South Africa has been selected as the top performing African market by several investment houses, even though Zuma fears political problems in Zimbabwe threaten that growth.

Analysts say the main problem seems to be one of perception, rather than fact. “There’s nothing that investors like more than stability, and…the events we’ve seen in Zimbabwe this year have not consolidated that view,” Shumba said. “But across the Limpopo, there has been no contagion whatsoever as widely feared at the consummation of the GNU.”

Zuma knows the sooner stability is restored to Zimbabwe through a free and fair vote, the better for South Africa in particular and the region in general.

“The problems of one of our largest trading partners in the region and the second-largest economy after South Africa in the region cannot be in our interests,” he said. “It’s difficult, given the proximity of an election, but we must try now to help.” Some investors fear that, in 10 years time, South Africa, whose ruling ANC is mulling adopting an indigenisation land policy structured around the Zimbabwe model, could be as turbulent and as cash-strapped as its neighbour.

Analysts say a more legitimate concern is the fear that any worsening of Zimbabwe’s problems could trigger a huge influence of economic refugees into its more stable neighbour, a problem South Africa is currently grappling with.

Post published in: Economy

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