Look East policy hits brick wall

THE Zanu PF’s Look East policy to revive the country’s sagging economy has hit a brick-wall as Asian investors are shunning Zimbabwe perceiving it as a risky business destination, it has been learned.

DUMISANI SIBANDA, ASSIGNMENTS EDITOR

Industry and Commerce minister Mike Bimha yesterday conceded that Asian investors, including Zanu PF’s much touted all-weather friend China, were withholding their money from the country.

He was speaking during a discussion of a paper titled Delivering Sustainable Growth in Africa presented by Japan Institute of Developing Economies’s Takahiro Fukunishi during a public lecture in Harare.

The investors cited political risk as the major drawback for doing business in Zimbabwe.

“There is an issue of country risk,” Bimha said.

“Insurance companies cover trade risk, but don’t have the capacity to cover political risk. This has a bearing not only on trade, but investment as well. Countries in the East which included Japan, China and India insist on cover against political risk.”

Although Bimha said that the government was not “sitting on its laurels” in trying to woo investors from the East, it emerged that “country risk” was compounded by the fact that Zimbabwe had a seemingly insurmountable debt of around $11 billion.

Recently, Zimbabwe, which is on an International Monetary Fund staff-monitored programme, was told to first pay its debt before it could access new money from the Bretton Woods institutions – the IMF and the World Bank.

The government turned to the East for investment and trade after a fall-out with the European Union and the United States following the launch of the land reform programme in 2000.

But yesterday participants confirmed that it was difficult to do business with their counterparts from the East including Japan who insisted on insurance cover for political risk.

Zimbabwe could benefit from being a Comesa member to enjoy benefits that include trade insurance, but the country has so far failed to pay the $25 million required for it to enjoy such benefits.

“As a member of the Common Market for East and Southern Africa we have the African Trade Insurance which ironically was mooted in Zimbabwe, but now is headquartered in Nairobi, Kenya,” he said. “We have started the process of being part of the initiative. Actually, we were admitted last year, but we have not paid the money we are required to pay to enjoy benefits of being a member,” Bimha said.

The government, Bimha said, needed about $25 million as insurance cover.
Zimbabwe had hoped the discovery of the Marange Diamond Fields would lift the country out of its economic abyss, but this has not been the case as it is reported that very little is finding its way into the fiscus.

“I am talking to the Minister of Finance (Patrick Chinamasa) and talking to the private sector and I think the Bankers Association of Zimbabwe must join because it also affects lines of credit, to mobilise resources to pay the money required for the African Trade Insurance,” Bimha said.

Earlier, Fukunishi said although Africa was experiencing a steady rise in its economic growth this was “unstable” in some instances as it was driven by natural resource.

“It could be affected by commodity price fluctuations,” he said. “There is a problem of limited resource endowment per capita, for example, in the case of oil Nigeria has a per capita income of $488 while it is $15 841 for Gulf countries. There is also a problem of what we call in economics the ‘resource curse’.”

Resource curse is a term which refers to a paradoxical situation in which countries with an abundance of non-renewable resources experience stagnant growth or even economic contraction.

Fukunishi said African countries should also be careful about Foreign Direct Investment without putting systems in place to benefit from the FDI spillover which refers to benefits such as technology transfer, technical assistance and access to markets.

41 Comments

  1. Chinese are looters they are taking our diamonds for free. we have nothing to show for the diamonds. the country is risky n expensive to do business. with dearth of pro business policies who would throw away their capital??

    1. @ngoma ndiyo ndiyo: chinese are not at all looters but they’re sly business people who look at opportunities and utilise them. They want to be the biggest economy in the world and they’re doing it their way. ZANU PF thought they Zimbabwe was an extension of China and that they could live on the Chinese generosity or welfare? They see Zimbabwean opportunites as no different from almost the ret of the world, except they can not solve our problems.

  2. Pehaps one piece of reality that may have escaped our rulers is: MONEY only makes friends with more money and everything else is penny twaddle. The group of guys called international risk analysts are the new high priests who determine who gets what where, why and how..this is cold reality. Why we imgine a BUSY world has an interest in some ugly smelly broken little place called Zimbabwe have to wake up NOW…we are heading at breakneck speed into a very dark cold place!

    1. Iwe Falcon, utiitire mushe, our country is far from the Godforsaken jungle backyard yu are describing, we compare favourably with some of the best in Africa,Luk man, they can keep their millions and we will keep our resources , sooner or later, they will return, on our terms. Musachema vakomana, God luvs us like he does other nations

      1. Dont worry Don Falcon has an identity crisis. A house slave/ negro.

        1. @Changlong- We all know you this giant genius with no equal..One request: as the house nigger that you have annointed me, can you promise me that I get to stay in the house rather than go back to that big cave under that smelly rock you seem to dwell most of the time? I rather like it better in the house.

      2. You are a big dreamer. If we give you resources and you keep them in the ground and you say you are rich you must be warped upstairs. Remember the parable of three servants given talents you are the third and stupid one.

      3. Really, Don Wezhira? Which best in Africa does Zimbabwe compare with?

        Of course they are keeping their millions. If we want them to keep their money why has Chinamasa been globe trotting with a begging bowl, whether or not God loves you?

        We want their money so much that Mugabe is always berating them about their “filthy illegal sanctions”.

      4. nhai wezhira .can i tell u this do not fool your self saying they shall return no they will not.either way our resources will reach them directly or indirectly.i prefer the former.there is a bit of transparacy

      5. you guys are living in a dream world… they must keep their money – not give it to a bunch of thieving rats and beggars who think it is their right to get free money… go back to your sadza and point…

    2. @ Falcon, investors act on the promise of a return on their investment. Any country endowed with valuable resources of a much higher quality than most parts of the world will always attract the interest of the East and the West. Our government will get it right at some point and trade will kick off. The Chinese are not going nowhere, neither are the Brits and Americans. Zimbabwe’s stability depends on all of us working towards a vision of prosperity in unity and fighting a common enemy in unity. MDC T was dumped by the Western investors towards the last election, this should wake them up to a reality that money has no permanent friends just as the attitude of the Chinese should wake ZANU PF to a reality that the Chinese only care about profit. The Chinese, in my opinion, make better partners because they will do business with any government unlike the West who pretend to be the world’s moral authority while secretly working towards turning their enduring wet dream of owning the earth and subjugating its citizens into a reality.

      1. scotv, after 33 years of blundering you still think our government “will get it right at some point?” This point at which they will get it right, will it be in this century and the next? You are welcome to dream on.

        Maybe at some point Zanu P.F. will realise that surrendering national resources to the Chinese and allowing them to build on wetlands will not make them foolish enough to pour money into a country whose government has no clear economic policy.

  3. “Money does not grow on trees and there are no comrades where money is concerned”.

    A really steep learning curve for the guckrawundies!!

  4. Wow, what a revelation. The Minister has actually discovered that there is an issue of “country risk”. This issue has been front and center for the past 13 years, but Zanu Pf politicians buried their heads in the sand and refused to acknowledge this reality opting instead to focus on the sanctions scapegoat. Fellows get with the program by facing reality in order to address pertinent issues honestly and in the national interest. Country risk will continue to be the major determining factor in attracting both local and foreign direct investment. Economics 101. Stop the history lessons and foolhardy grandstanding and focus on bread and butter issues including total re-engagement with the west . The look east policy has not wielded any results of substance because they too are alive to the country risk albatross. Comrades get real.

  5. Ndafunga the proverbial ‘two headed creature”

  6. ‘We neither look East nor West,but we look Forward’ Koffi Annan, former UN Secretary General, and the only one to come from Africa. Very simple but prophetic words that everyone (except those that believe in their own lies) applies in daily life.

    1. Check your facts before you lie to the public. Would you inform us who is Boutros Boutros-Ghali if Annan is the only former UN Sec-Gen to have originated from Africa?

    2. And looking Forward may mean looking East if Forward is in the Eastern direction.

  7. @Gutsie- it was actully that yesteryear ‘thief’ Nkrumah who said this not Annan..compatriots, yah? I guess all Nkrumah was saying ultimately is people are neither for nor against, they are thinking about themselves. So people would not care less if Gringo, Mbudziyadhura, Tsvangirayi or Mugabe ruled them, what interests them is what these guys can do for them.

    1. Very true, what can Tsvangirai do for me? Is there a single answer to this question? Governing differently is not an answer, neither is change an answer. Perhaps the bigger question is what does the majority want and the biggest question is who constitutes the majority? Whoever speaks to the needs of the majority gets to rule, even if the needs of the majority are considered bad for business; that is what democracy is about. If MDC grasped this concept they could have a chance to rule one day. The good looking, sophisticated, wealthy facebook generation is the loudest but they just don’t have the numbers. Perhaps MDC should influence the simple majority to become more ‘cultured’ but that is such a difficult uphill task! There are more people in Zimbabwe who look and sound like Chinotimba than there are people who look and sound like masalala.

      1. scotv, are you talking about people who are ruling but cannot even produce an electronic voters roll? The very ones who in 33 years only have potholed roads, cholera and typhoid to show for their rule? The same people who are so ashamed of their own universities that they send their own children to study abroad and get flown to foreign lands to seek medical treatment? No wonder why they have only come to realise, after 33 years, that there is such a thing as country risk.

        1. @ Rudadiso, you are missing the point here. The change you want does not come because you are able to point out the rot that is there in plain sight for all to see for themselves! Victory only comes after defeating the one holding the power. This is where your preferred party gets it wrong. It lacks leadership and a winning strategy. Winning is possible in spite of the tremendous odds but it will not come on a silver platter. While ZANU PF is working its rural support base, MDC T is preparing victory celebrations, demanding reforms and doing absolutely nothing to get rid of the rhodie cloud hanging over its head. ZANU PF has never denied the existence of the rot but uses the rot as a weapon to unite its support base against sanctions and external enemies it blames for undermining development and causing the rot. MDC T spends too much time pointing out the rot and black incompetence to everyone, sometimes through the condescending tone of an overweight rhodie; that does not help. Outfox the one holding the power then fix the rot or go home!

          1. That “outfoxing” is only possibly in Western world where its all about one’s record of governing,policies and campaigning tactics. In Zimbabwe Zanu Pf will rule forever because they unleash untold violence on opponents, employ NIKUV, and monopolize airwaves among other dirty tricks. So unless and until Zanu Pf is willing to contest elections based on just its governing record and current and future policies, forget about “outfoxing”

          2. I made no mention of any preference of a political party! Why do you jump to the conclusion that anyone who points out Zanu P.F. shortcomings is a member of the MDC? Don’t be so narrow minded.

            You like pointing out the rot within the MDC, a party that is not in power, but then go on to say the rot in in the ruling party should not be pointed out. Are you for real?

      2. Scotv, your analysis has been good so far. It is only this one you blundered; governing differently in Zimbabwe is the answer. Comradeship destroyed our economy – those close to the inner circle are absolved of any wrong doing no matter what.. We need accountable and responsible leaders – This begins from the top. i applaud the minister for not hiding facts of the meeting.- there was mention of country risk and political risk? In simple terms, country risk =Zimbabwe, political risk=Zanu PF, it is still in power therefore no reliability can be attached to their policies/gaurantees as they are bound to change any time to suit policy maker’s needs. NO BUSINESS in this world will ever be run that way. For your own information, MDC-T is now the majority party in Zimbabwe, they must be given a chance. No one need to be lectured on the capabilities of ZPF as they have gone past their sellby date.

      3. @scotv.”There are more people in Zimbabwe who look and sound like Chinotimba than there are people who look and sound like masalala.” Mongo wako wakapinza.

      4. You can ask Tsvangirai.

  8. Look East, if your friend helps you to rob others, he will never trust you………ZANU ichamuka riniko???

    1. Luks like everyone is looking EAST, uncle Sam is broke, the EU is also broke, aflame and confused, Like it or not they lied to us ,Hee Private Enterprise…heee Keynesian Models,…hee Fukuyamaism …heee Liberal Democracy..Looks like Communism really WORKS!!

      1. @Don- be a sport and give us whatever you are smoking or drinking, man, it does sound really good! Communism was killed by that Deng Xiaping genius..not even its ghost has been seen in China in a year of Sundays!

        1. Communism is very much alive in China, side by side with Capitalism. The 2 can coexist. One thing is for sure though, Capitalism has failed. Europe is in a free-fall and the U.S. government debt, individual states debt, corporations debt, individuals debt, government welfare payments and other obligations of the U.S. government to its creditors are a staggering $70 trillion!!!!!!! Why do you continue to look to that train wreck as a model? Why do you refuse to look at the merits of empowerment as a model without being blinded by your loathing of the man preaching it? Can we, as Zimbabweans agree to debate ideas as separate entities from the mortal men who champion them?

          1. But the Chinese have given $300 million plus for the Kariba Hydro, and you talk of failure? Then something is wrong. A chinese mall in Belvedere. The Defence college, investments in diamonds etc, and you say Look East is a failure, somebody is not honest. Please research on how much money has been poured into this economy by the Chinese. The USA cannot do without the Chinese. Everyone is looking east dear friends. Think positively and life will be good.

  9. It is all about sanctions and nothing else.

  10. This regime cannot apply laws of the jungle (invading farms and other businesses) on one hand and then try and apply the laws of economics on the other – sooner or later they will come short. There’s only one way of doing things – and that is doing things the right way all the time: doing things lawfully all the time and you will not go wrong. This regime resorts to cadging for funds from other wealthy countries because the regime always acts unlawfully all the time. Mugabe playing to the gallery at the UN does not benefit the country: he cannot afford to rail against wealthy nations. The only country in Africa which is at “war” with the West is Zimbabwe because ZanuPF cheats all the time and expects the West to let ZanuPF get away with cheating. He who pays the piper calls the tune. ZanuPF is reaping what the sowed.

  11. The last sentence should read, “ZanuPF is reaping what they sowed.”

  12. Owning an abundance of natural resources does not necessarily transform into riches as seen in DR Congo. DR Congo has more natural resources than other countries but it is not a rich country simply because there is chaotic governance whereas Japan, which is relatively small in size, has no natural resources but is the second most prosperous country in the world. Why? Good governance. Simple. Nigeria has an abundance of oil but the governance is also chaotic and the citizens are yet to bebefit from the oil riches.

  13. The last sentence should read, “Nigeria has an abundance of oil but the governance is also chaotic and the citizens are yet to benefit from the oil riches.”

  14. Akazungaira apa ndiyani machina here or mazanu pf. Do we get jobs from china or not?

  15. The desire by the reactionary press and oppositional analyst to proclaim the demise of the look east policy has far outpaced reality on the ground. There is no country or institution in the world, east or west, with the capacity to resolve Zimbabwe’s economic problems. Eventually the madness of these people will be replaced by the cold realization that we are all in the same boat together and whether we sink or swim we do that together. No external saviour is coming, no knight in shining armour and no confuscian genius will rescue us.

    We have to mobilise the little resources we have within a conducive policy framework to ensure the revival of Zimbabwe’s economy. I have news for you doomsayers, the look east policy is very much alive. Just look at what has happened in the retail sector, next will be mining and agriculture, then manufacturing and eventually banking. It’s a process of transformation, from white domination to Chinese partnership! Expect resistance from townies, it’s their nature, they opposed the Chimurenga war too!

    1. When you wake up from under that rock you are living, let us know.

  16. Iwe gutsie kana usingazive history nyarara. There are two guys who became UN secretaries general the other one was from Egypt and its yo homework to find out his name…

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