The relative political stability of the eight-month coalition government under Robert Mugabe and Morgan Tsvangirai, and the replacement of the local currency with the US dollar and the South African rand, has seen investment activity in the country start to pick up.

Though investors are cautious about investing in a country that has until recently been hard hit by violence, endemic corruption and preventable famine, greater price stability and the opening of lines of credit from South Africa are being seen as steps in a more positive direction.

Advertisement

The Development Bank of Southern Africa is considering a number of investments in the country in the mining, agribusiness, energy and telecommunications sectors, while Canada’s Caledonia Mining recently announced that it will be doubling its gold production from its mines in Zimbabwe.

There have also been reports that Arcelor Mittal’s South African operation is contemplating taking over Zimbabwe Iron and Steel, while another South African company, Tongaat Hulett, is said to be interested is reinvigorating production in its existing sugar mills.

Zimbabwe, which before the decade-long instability had been known as the breadbasket of Africa, boasts good infrastructure and ­transportation routes, which had made it a popular location for investors interesting in expanding their African base.

“The decade-long period where there was little or no investment has opened up myriad opportunities,” said Shaun Lightfoot, managing director of investment company Zimvest, in an interview with TradeInvest Africa. “The foundation has been laid in Zimbabwe and now investors need to take advantage of that.”

However, despite the positive news coming out of the country, foreign investors are still treading cautiously. There are still restrictive legal hurdles; the Indigenisation and Economic Empowerment Bill, signed by Mr Mugabe two years ago, forces foreign-owned firms to sell 51% of their public shares to black empowerment groups.

Though the government has promised to look into changing the law, companies such as South African-based Impala Platinum – the biggest investor in Zimbabwe’s mining industry – are stalling over potential multi-million dollar investments.

Ginanne Brownell