eBusiness Weekly
Dr Noah Manyika
Let me say from the outset that the outcome of the next election should not be determined by what international investors or foreign governments believe is best for us.
The reality is that our interests and theirs will not always be the same. The question must not be what international investors should expect, but what is in the best interests of the nation.
It would be tragic to fool ourselves into believing that all of them are interested in the most democratic outcome for our elections.
In 1971, after the overthrow of Milton Obote, the British Foreign Office noted with delight: “Our interest in Uganda in terms of citizens, investment, trade and aid programmes are best served in these circumstances by early recognition of the new government.”
The British High Commissioner to Kampala, Mr Richard Slater added: “At long last we have a chance of placing our relations with Uganda on a friendly footing,” and that Idi Amin was “deeply grateful (as I am) for the promptness with which Her Majesty’s government recognised his regime.”
Not all Western governments will demand a demonstrable commitment to human rights before encouraging investment. During the rule of Emperor Bokkassa in the Central African Republic, French President Valéry Giscard d’Estaing declared himself a “friend and family member” of Bokassa’s not because of the Emperor’s commitment to the much vaunted French values of “liberte, egalite, fraternite,” but because the French got what they wanted: Uranium. The expectation of investors will therefore depend on what they want and the kind of government they believe will make it easy for them to get what they want.
It’s hardly surprising that today, the complaints from Western investors and governments are not so much about China’s human rights record than about Beijing’s perceived protectionism and unfair trade practices. The reality is that democracy and human rights records are usually secondary considerations for investors, and that the primary consideration for investing is whether there is an opportunity for them to maximise the return on their investment.
Milton Obote
Conversely, it usually takes a threat to the bottom line and not necessarily proof of human rights violations to convince investors to divest from countries with bad human rights records. That was clearly demonstrated in the late eighties by the partial success of the global anti-apartheid movement to force some companies out of apartheid-ruled South Africa almost two decades after initiating the push for divestment.
The movement’s relentless lobbying had become a real threat to the bottom line of US companies with South African interests which had not adopted the Sullivan Principles of 1977 that required, among other things, equal treatment of all races in the workplace.
There is no shortage of investors with enough muscle to guarantee them the protection and patronage of many weak governments. Such investors can be found in the most dysfunctional countries and economies concluding opaque deals that enable them to reap outrageous profits through transfer pricing and other illicit financial flows. They are unsurprisingly not interested in economies being opened up to their competitors, nor in governments that will strongly defend the interests of their people assuming power. To them governments committed to transparency would not necessarily be “investor friendly”.
So here is the bottom line: The fact that the environment is judged to be friendly by one set of investors does not mean it is friendly to all. The “Look East Policy” might have been friendly to Chinese investors, but it was not necessarily friendly to everybody else. Similarly the fact that some investors judge the investment climate to be unfriendly does not mean that it is to everyone, or that it is not in the interests of the nation.
Unfortunately bad government means “good” business for some investors.
Not every investor wants a country where there is the rule of law and where opportunities for transfer pricing do not exist and illicit outflows can be interdicted.
Not every investor wants a government that will expand local value addition and maximise what it can get from its resources.
Not every investor will be thrilled about a government that will aggressively encourage an Import Substitution Industrialisation policy.
The best way forward for our country is not just to expect people to come from outside to create jobs for us, but to give our people capacity to build small businesses and a strong indigenous backbone for our economy. While the government that must emerge from the election must not be hostile to foreign capital, it must be clear about what is in the best interests of the Zimbabwean people.
It is time for African governments to be talking even more about Local Direct Investment (LDI) than FDI. Our country must be the most local-investor friendly. We must make it easier for Zimbabweans to do business in their own country and give the small business the best opportunity to enter the formal economy and to expand into medium and large concerns that can compete in the global marketplace.
We have a unique opportunity to make this work because we are a nation with exceptional entrepreneurial talent. Curiously, there is a tendency for the advocates of liberalization to focus on supportive structures and special dispensations around duty, surtax, licensure etc for foreign investors but not for local manufacturers and entrepreneurs. By denying the local manufacturer and entrepreneur the same structures and dispensations, we compromise their competitiveness and confine them to the category of traders. We also rob the local communities where local investors are found in the upstream and downstream opportunities that only higher productivity and formalisation can provide.
What must come out of the 2018 elections? A courageous and selfless government that will act boldly in the service of the common good. Inspired leadership with an uncommon imagination and drive to build a world class nation and communities.
Competent leaders with the integrity and moral courage to keep promises made and committed to skilled and informed execution of responsibilities. Authentic grounded leaders with a true love for the nation of Zimbabwe and for the growth and well-being of her people.
Wise leaders who have the ability to balance the interests of all Zimbabweans and to make decisions that strengthen our unity and the impact of our collective actions.
They will ensure that policy and political decisions that might impact business will be made expeditiously and out of full recognition that the social and economic costs of delayed decisions can be unacceptably high.
Such leaders will not just be concerned with what international investors expect, but what is in the best interests of our nation.
Dr Manyika is president of the Build Zimbabwe Alliance and its presidential candidate in the 2018 elections
