Election uncertainties scare away investors
http://www.theindependent.co.zw/
May 24, 2013 in Opinion
The wrangling among Zimbabwe’s diverse political parties, numerous political
action groups, the president, prime minister and many others in the
political hierarchy as well as the media as to when the presidential and
parliamentary elections will be (or should be) held is having a grievously
negative impact on the country’s economy, severely worsening its already
very fragile state.
Column by Eric Bloch
The president persists that the elections be held on June 29 2013, the date
constitutionally prescribed for the dissolution of the present parliament.
In pronounced contradistinction, the majority of Zimbabwe’s other political
leaders and their parties, with reason, insist that the requisite elements
for a wholly transparent, free and fair election cannot be created and
assured if it is to be held on that date and therefore, the polls should be
delayed for such period as permitted by the Constitution and as will enable
the elections to be properly and fairly conducted.
Effectively, their demands are that the elections should not be conducted on
June 29 2013, but that they be held not later than October 30 2013.
It is also very evident that the Southern African Development Community
(Sadc) is not only supportive of the election date being one which can
assure the propriety of the elections, but is also insistent that this be so
and therefore it is not possible for the elections to be conducted in June.
Over and above the immense sense of insecurity instilled in almost all
Zimbabweans by the unceasing political squabbling over the election date,
there are fears that the elections will not be free and fair.
For some of Zimbabwe’s key politicians endlessly seek to minimise the extent
to which international observers should be allowed to monitor the polls,
which are vital to the country’s future. The grounds recurrently cited as
justification for certain would-be observers to be barred are that such
observers would be representatives of countries which have allegedly imposed
“illegal” international sanctions on Zimbabwe.
In doing so, the opponents of a presence of such observers stubbornly
disregard that there is no “illegality” in the application of the sanctions,
and that if the elections are properly conducted, such sanctions would be
lifted and would cease to exist.
The concerns of most of the populace are intensified by the frequent threat
from leaders of diverse action groups such as the alleged war veterans and
recurrent incidents of apparent involvement in the political arena by some
of the leaders of Zimbabwe’s security and armed forces (who,
constitutionally, should be apolitical).
Their vituperative outpourings and frequent threats fuel intensifying
apprehensive of violence, intimidation and harassment, and especially so in
rural areas.
The further erosion of confidence in the future, occasioned by the extremely
negative vibes as to when and how the elections will be conducted, has
directly and pronouncedly adverse impacts on the economy. Worry and
despondency is not conducive to productivity, which is one of the
prerequisites for the viability of industry and of many other economic
sectors, including agriculture.
Such uncertainty destroys confidence within the financial sector, resulting
in lack of availability of loans and other facilities greatly needed by most
operations in the economy. Similarly, the atmosphere of doubt intensifies
the reluctance of many to keep their funds within banks and other financial
institutions.
There is an unfounded belief that such limited funds as people may have are
more secure if kept in their wardrobes, under their mattresses, or in their
wallets and handbags. Businesses prefer to hold such cash as they may have
in their safes.
Many fear that the country might not have a democratically-elected
Government in office.
Many are therefore externalising such monetary resources as they are able.
The result is an intensifying monetary illiquidity in Zimbabwe, further
constricting economic activity. Therefore the economy will continue to
decline and it will be foolhardy for Zimbabwe to prematurely revert to its
own currency.
For a very considerable time, potential foreign investors have been
reluctant to commit their resources to Zimbabwe, notwithstanding their
awareness of the stupendous potential for such investment. They have long
recognised the magnitude of opportunity for viable and substantive
investment into mining, manufacturing, tourism, services, and many other
sectors of the economy.
However, ever since the pursuit by Zimbabwe of a land reform programme which
had total disregard for property rights, liability under Bilateral
Investment Promotion and Protection Agreements (Bippas), and for preserving
and enhancing agricultural viability, potential investors were fearful of
similar inequitable and destructive policies being pursued by government in
other economic sectors.
Such a pursuit would destroy investment security and occasion great losses
for investors, and hence they were reluctant to pursue any of the many
investment opportunities.
The concerns of investors were subsequently intensified by Zimbabwe
embarking on its Indigenisation and Economic Empowerment programme.
Almost without exception, the potential investors are supportive of the
principles of Indigenisation and Economic Empowerment, but not when it is
founded on investment and asset expropriation, deprivation of investment
security, and imposition of indigenous participation without availing the
investor the opportunity to select his or her own indigenous co-investors.
Now the hullabaloo over when and how the elections will be conducted, and
associated disquiet as to whether such elections will yet again be devoid of
law and order and will not be democratic, free or fair, has provoked even
greater reservations by potential investors as to whether or not to pursue
opportunities here.
For economic recovery to be comprehensive, investment is essential, but
Zimbabwe continues to create concern barriers for the much-needed
investment.
Zimbabwe’s economic wellbeing is also contingent upon alleviation of its
gargantuan overdue foreign debt. It can only achieve that by a combination
of debt-rescheduling, and debt-relief.
To a great degree that relief can only be obtained under the Heavily
Indebted Poor Country (HIPC) convention, but uncertainties on elections are
a major barrier to seeking and being granted HIPC relief, or any
rescheduling of debt.
The international community will not entertain any representations for such
measures to be granted unless convinced that Zimbabwe is genuinely
conducting unequivocally proper, free and fair, elections.
The current election hiatus does not provide that conviction. Similarly,
Zimbabwe greatly needs, in order to spur economic recovery, international
developmental aid, over and above the welfare aid presently given to address
the inadequacies of food availability, healthcare, and education. But that
development aid will not be forthcoming to any significant extent until
proper elections are held.
For great economic recovery to be realised, the first and most urgent need
is for elections to be timeously held, but not with such undue haste as
precludes their proper conduct.
It is blatantly evident that legitimate elections cannot conceivably be held
within six weeks as sought by the president and his political party, but
equally that necessary actions must be vigorously and intensively pursued to
ensure internationally acceptable elections within the next four months.