THE one big question on the minds of the generality of the Zimbabwean citizenry in the period after elections is: Are things ever going to get better in the country?
Editorial
The answer is not as simple as assumed. Much depends on how the economy will perform.
Going into elections, the economy was plagued by numerous, unsustainable macroeconomic imbalances, notably the twin deficits; high and unstable inflation; the cash crises and foreign currency squeeze; a mounting government debt; growing economic informality and negative employment growth.
In urban areas, many wished for opposition victory in the elections, believing it to be the only answer to Zimbabwe’s economic woes. More precisely, they hoped a change of government would help restore business and investor confidence.
Those who hold this opinion are not entirely wrong, for their perspective has a strong historical basis in the untoward behaviour of successive Zanu PF governments under former President Robert Mugabe, which showed little regard for investors, passing policies that were unfriendly and at times openly hostile.
At this juncture, the next big question is: Would investor confidence still return to Zimbabwe if the Constitutional Court uphold the results of the 2018 elections?
One needs to understand the dynamics of investor confidence and review the country’s investment profile to have a fair understanding of what to expect.
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Given the state of Zimbabwe’s capital markets, by investment reference is implicitly being made to foreign direct investment comprising equity capital and comprising portfolio inflows.
Typically, the mobilisation of capital from offshore capital markets depends on what is commonly known as investor confidence, a term which refers to how investors think and feel about both the business prospects of their venture and the business environment of the country hosting their enterprises.
Before anyone makes the decision to go into business, they will assess all dimensions of risk, especially political and country risk which they can’t control, to ensure that nothing goes wrong with their investment once made.
Investment risk in its multidimensional nature is a matter of perception or attitude.
Even investment indexes such as the Doing Business Survey and the Fraser Institute Annual Survey of Mining Companies are built on a conceptual and methodological framework based on the perceptions and opinions of the investors themselves.
What this means for Zimbabwe is that the country’s investment prospects do not necessarily depend on which government comes to power, but on how well the next government performs in changing the negative perceptions of the international investment community on Zimbabwe.
This involves taking positive steps in addressing all the salient issues about investment that investors are concerned with.
These include policy certainty; property rights; equitable taxation; competitive investment regulations; ease of legal dispute settlement mechanisms, commitment to democratic rule and rule of law, among others. A government which pulls off these reforms can turn the economy around.
In fact, investors are least worried about who’s in power. All they are about is whether the country presents great business opportunities and whether their businesses are free of threat.
