While the new Government makes determined efforts to turn the economy around, opening Zimbabwe up to the world, people must accept that there is a time lag between the signing of a deal and the creation of new jobs and the flow of new taxes and exports.
This “crisis of expectations” needs to be managed, and managed carefully, otherwise the high morale created by the dramatic changes started in mid-November last year is in danger of being lost.
To take just one example. Signing an investment deal for a new mine does not mean that operations start today. What it means is that the investor can now mobilise the research team, which may well be largely foreign based although a handful of Zimbabwean experts will probably be added, who will do the detailed geological study, fleshing out the general research publicly available.
Then an operational team needs to figure out how to turn that detailed geology into the plan of mine. Then machinery needs to be ordered, made and delivered. And we need to remember that at this sort of level you have to have the stuff specially made; there is no supermarket selling high-end mining equipment.
It is only at this stage, perhaps a year after the initial deal, that the investor will start hiring local staff, everyone from the future mine managers to the people who do the most menial jobs and putting in place the required training programmes. So at least at this stage the jobs are being created, piecemeal and in stages.
Until production starts there will be little economic benefit to the nation. Then exports can start, which helps the balance of payments. Taxes will be low at first, simply because our tax structure, as with most countries, allows a lot of deductions for capital expenditure.
It is the same for most investments. Some can be implemented more quickly, especially when a moribund existing factory is bought and revamped. But even here it might take several months to strip out the old obsolete equipment, bring in the new stuff and retrain the staff. But at least people have to be hired to do the clean-up and to be trained.
Then, we have been warned, many potential investors are waiting for the elections in the middle of the year. This is not so much as a concern over dramatic policy options. Although the opposition parties have not provided detailed economic policies there appears to be, in the broad economic outline, a great deal of agreement and consensus in Zimbabwean economic and political circles.
So regardless of who wins the elections, few investors should be worried about a noticeable change in the economic climate and policies. What obviously does worry them is an election marred by violence, an election where the winners do not have a clear mandate. And some might well worry about which team will continue implementing a generally agreed policy. Competence will be at a premium.
This does not mean Zimbabwe and its Government must sit back and do nothing. The Government has been cleaning up inherited issues. For a start, corruption has moved from “everyone does it” to zero tolerance. And if people wonder about this then they should have a glance at the court cases pending over the big stuff plus, at the lowest level, recognise the fact that you can now drive legally around Zimbabwe without being shaken down by road blocks or get a driver’s licence simply by passing a test and paying set-down fees.
That shift alone makes a big difference.
The long haul of legal changes has started. The worst legal barrier to investment, the Indigenisation and Economic Empowerment Act was amended in a fast-track procedure as part of the Finance Act. Just two minerals still need a majority Zimbabwean shareholding, although even here if there are other benefits this can be altered, and the little businesses are reserved for citizens. But that second part is largely an immigration control than an investment control and simply stops someone landing in Zimbabwe clutching a hairdryer and claiming they are setting up a hairdresser as an investment.
One little-trumpeted change to the Act was in fact the switch from “indigenous” to “citizen” for the small group of reserved small businesses, and that it is in line with law in many other countries from Botswana onwards. It was always seen as unfair to punish a few thousand young Zimbabweans because their parents, grandparents or great-grandparents were perhaps not the perfect immigrant. The practical effect is almost zero. As ZimStats has noted in its census reports, it is almost meaningless to differentiate the tiny ethnic minorities who call Zimbabwe home. But the new perception tells investors that Zimbabwe is moving into the future, not sitting in a dark past.
There is other legal cleaning in progress and it would encourage investors to see, as these come before Parliament, a general consensus between the Government and Opposition benches with criticism and proposed amendments, from both sides of the House, simply trying to make the proposals better. The people, the voters, will not be that interested in petty point scoring. The actual votes cast in a few months will be largely over perceptions of competence and ability to deliver, not over ideology.
We agree that the Government must continue to press forward with its pro-business selling programme. And those who complain about the cost of the President’s trips should consider that he seems to be spending around a quarter of his predecessor. On trips outside the immediate region, plus many within the region, the President has found it easy to attract business delegations, and the taxpayer is not paying for these.
They pay their own way because they see the advantages of having the President helping to open a door that they can then move through to do business.
And at the same time we must continue to make the changes in law, regulation and attitude required to make doing business in Zimbabwe easy and a pleasure. Yes we are open for business, but let’s also make sure that this means we have a nice paved path from our front gate, not some morass of senseless snarling bureaucracy.