Arcadia Foundation

Zimbabwean Prime Minister Morgan Tsvangirai stated last week that a law to increase local black ownership of foreign firms would be implemented gradually and without forced sales. Ultimately, his staff have reiterated sentiments that investment is returning and that ‘Zimbabwe is back‘.

Zimbabwe’s government published regulations earlier this year forcing foreign-owned firms, including mines and banks, to transfer a 51 percent stake to black Zimbabweans, a move that divided the power-sharing government and spooked investors looking to give the once-breadbasket of Africa another perusal in lieu of the progress slowly being accomplished from the joint administration.

Tsvangirai stressed that “it’s willing buyer, willing seller. There’s no expropriation,” at a conference on Zimbabwe’s political and economic prospects in neighbouring South Africa’s commercial capital.

Foreigners regularly cite the law as their main concern about investing in Zimbabwe, which is desperate for external capital to rebuild the economy after a decade of chronic mismanagement and decline under President Robert Mugabe.

Zimbabwean President Robert Mugabe told Reuters in an exclusive interview earlier this month he will press ahead with plans to transfer control of foreign firms — including mines and banks — to local blacks. ”What’s being implemented are minimum thresholds. You can’t start with 51 percent,” Tsvangirai said. Ominously, he added “but you also have to say how, over time, you are going achieve the maximum threshold.”

In the more immediate future, companies would have to adopt much lower levels of black ownership while presenting a road map towards ultimate black Zimbabwean majority ownership, he said.

Tsvangirai, whose MDC party is now in a power-sharing administration with arch-rival Mugabe’s ZANU-PF, said the government was still drawing up the thresholds for the minimum, initial levels of black ownership.

As a hypothetical example, he spoke of a minimum initial black ownership level of 10 percent for the country’s key mining sector.

Overall, Tsvangirai and two of his cabinet ministers painted a rosy picture of Zimbabwe’s improvements over the past 18 months: Schools and hospitals have reopened, shops have food on their shelves, hyperinflation has been killed, the U.S. dollar has become the main unit of currency, the tobacco harvest has doubled, and the government has plans to build new roads, rail lines and power plants.

The minister of economic planning, Tapiwa Mashakada, said the government wants to set up a “one-stop shopping” system for foreign investors so they can get all of their permits and licences within two days of applying. “I can assure you that Zimbabwe is a safe place to invest,” he said. “Zimbabwe is back.”

Some investors are bullish too. “This is the newest hard-currency economy in the world,” said Andrew Cranswick, chief executive officer of African Consolidated Resources, a London-listed company that invests primarily in Zimbabwe.

He predicted that Zimbabwe could become one of the world’s top-10 gold producers, as it was in the 1970s. Interest among investors is growing, he said. “There are seven flights a day from Johannesburg to Harare, all of them full.”

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