Zimbabwe’s president, Emmerson Mnangagwa. Photo: Bloomberg
JOHANNESBURG - Liquidity - starved Zimbabwe will start seeing meaningful capital inflows only after elections, which President Emerson Mnangagwa says are expected by July, the country’s national revenue authority says.

Mnangagwa took over from Robert Mugabe, who resigned in November, and has pledged to open the country for investments.

However, the post-Mugabe-era Zimbabwe continues to have mixed fortunes, with inflation stoking up and liquidity woes continuing.

Investors were worried about corruption and the government’s failure to reduce its public sector costs as well as corruption perceptions, fund managers and company executives said on Thursday.

Foreign currency allocations from the central bank were a trickle and that was hitting operators in manufacturing and mining, among other sectors, hard.

“An investor coming through (to inquire about opportunities) will still be worried that someone will ask for a bribe and this scares them,” Caleb Dengu, a private equity and investment adviser, said on Thursday.

Inflation in Zimbabwe closed last year at 3.46percent, attesting to inflationary pressures. The government revised its economic growth outlook for last year from 1.7percent to 3.7percent on the back of good rains last year, but economists say this is highly unlikely and the economy is struggling under a saddle of limited investment inflows.

Investors have been worried about political uncertainty in Zimbabwe, but this might have improved following Mugabe’s exit. Moreover, Mnangagwa has said elections will be held in the next five months in a bid to restore political legitimacy.

But it seems investors are waiting on the sidelines for the elections to usher in a substantive administration. Other experts say the country requires investments in its power generation sector as it is reliant on power imports from Mozambique and South Africa to bridge a power deficit that often grounds company operations.

Willia Bonyongwe, the board chairperson for the Zimbabwe Revenue Authority, said on Thursday that the government was faced with the challenge to have the interest expressed by some investors converted into direct investment inflows.

“Realistically though, not many capital inflows are likely to be realised until after the elections,” said Bonyongwe.

Mnangagwa has committed to fixing property rights issues and the indigenisation policy has been relaxed, but this has not yet been translated into policy and this, fund managers say, is deterring keen investors.

The real estate sector is also subdued and the central bank says this is because of an absence in mortgage funding.

Real estate experts say they expect interest in the sector, through new construction developments and projects, to pick up later this year.

“The sector is subdued but we have seen some projects coming up in Victoria Falls, but these have been long-term commitments.

“In terms of new projects, we may start to see meaningful activity in the second half of the year based on what is coming from the industry as investors seek a long-term settlement to the political framework through elections expected this year,” said a property evaluator with a real estate company in Harare.

Investors who have expressed a keenness to sink money into Zimbabwean ventures include Robert Gumede, the founder of the Guma Group of Companies, a South African investment firm which is eyeing $1.2billion (R14.7bn) investment deals in the country’s infrastructure, health and tourism, among others.

Africa’s richest man, Aliko Dangote, has also expressed interest in investing in Zimbabwe, but nothing has materialised yet.

- BUSINESS REPORT