HARARE – A election could be Zimbabwe’s answer to current economic woes that are largely due to policy uncertainty, a leading Harare-based economist says.
Anthony Hawkins, a top Harare-based economist, said while the impact of elections on the country’s economy depends on the conduct, a peaceful and well represented polls could be a blessing for Zimbabwe.
“Elections may be able to give the country a government that is able to make decisions, unlike the current situation that we have and obviously investors will respond,” said Hawkins, who is also an Economics Professor at the University of Zimbabwe.
Currently, the country’s inclusive government remains divided on the indigenisation law, which compels all foreign-owned firms to relinquish at least 51 percent shareholding to Zimbabwean locals.
President Robert Mugabe’s Zanu PF appointed Indigenisation minister Saviour Kasukuwere insists on a speedy implementation of the empowerment law while the two MDC formations are pushing for a flexible approach.
Economic Planning minister Tapiwa Mashakada, Prime Minister Morgan Tsvangirai’s appointee, said indigenisation was the reason behind the snail pace of foreign direct inflow (FDI) inflows.
He said government had approved projects worth more than $6 billion by December 2011, but were still on hold as investors have adopted a wait and see attitude citing possible acts of expropriation.
Apart from the indigenisation differences, government is divided on implementation of Green Fuel’s proposed mandatory blending.
Green Fuel is a joint venture between private local investors and the state-owned Agricultural and Rural Development Agency and plans to build six processing plants at Chisumbanje, each with a capacity of up to 300 000 litres per day.
The country’s major investment since dollarisation, Essar Africa Holdings’ $750 million steel production partnership is yet to take off as government remains divided on whether or not it should relinquish Mwanesi iron ore claims, a key enabler to the steel venture, to the new company.
The confusion, Mashakada said, portrays the country as a risky investment destination.
On the other hand, economic analyst Takunda Mugaga argued elections in Zimbabwe could derail the small progress that the economy has made since the formation of the inclusive government and dollarisation in 2009.
“For Zimbabwe’s economy, elections mark the downturn of everything, imagine if election talk can derail GDP growth, what about the election itself,” he said, adding the implications of elections include increasing country risk.
“This will discourage FDI, raise poverty levels as unemployment will remain at its all-time high, a struggling industrial sector as a wait and see attitude will be employed by the private business community and abuse of state resources which include vehicles and minerals as there is no separation of political parties and government.”