/ 5 July 2013

Zim: Business wants an end to political uncertainty

Zim: Business Wants An End To Political Uncertainty

Business in Zimbabwe is keen for an outright winner in the elections and is hoping that the next government will bring an end to the four years of policy contradictions that have characterised the unity government.

Since the formation of the government in February 2009, both President Robert Mugabe and Prime Minister Morgan Tsvangirai have admitted that the union was one of convenience and, whenever there were disagreements, spoke of the constraints of having to work together and making no pretence of their desire to break free from the unity government.

The business sector was keeping a close watch on the Constitutional Court's decision on Thursday regarding the election date. The court ruled that the poll will take place on July 31.

Charles Msipa, president of the Confederation of Zimbabwe Industries, said only peaceful and credible elections would allow the business sector to plan in the short to medium term, something they had been unable to do for years.

Msipa said the current political conflict over the date of an election was generating "a great deal of uncertainty and anxiety".

"We shall continue to engage with stakeholders in the public and private sector to seek measures and policies that create an enabling environment for business viability and competitiveness. Political stability is an essential precondition for an environment that fosters business and economic growth."

A slowing stock exchange
The Zimbabwe Stock Exchange (ZSE), which kicked off the year as one of the highest trading bourses in Africa and is used as a yardstick to gauge the mood of investors, has been in decline this week.

A local research body, MMC Capital, said in its weekly market report that activity on the ZSE was slowing down as a result of the tense political environment.

"Market activity is slowing down as political rhetoric takes centre stage, causing some investors to take a wait-and-see approach as they await the possible upcoming elections," the report said.

Economic analysts point to the indigenisation programme as the biggest source of conflict between Mugabe's Zanu-PF and the Move­ment for Democratic Change during the tenure of the unity government.

Youth Development, Indigen­isation and Empowerment Minister Saviour Kasukuwere has been leading Zanu-PF's aggressive push to take over 51% of foreign-owned firms.

Companies such as Zimplats, Mimosa Mine and Pretoria Portland Cement have had to hand over majority control to indigenous blacks in multimillion-dollar empowerment deals.

The MDC has opposed the programme and has described it as a populist policy meant to benefit a coterie of well-connected Zanu-PF members.

Eric Bloch, a senior partner at H&E Bloch consultancy, said the business sector had supported the indigenisation programme only in principle.

"What they are against is the way it is being done; that is, the way it is targeting foreign-owned companies. They would want to see it modified."

Criticism of the MDC has mounted over its perceived failure to put the brakes on the indigenisation policy.

The MDC has centred its economic policy on job creation.

Policies, Income Tax Bill
Bloch said the hope in business was that, after the polls, there would be clarity on policies.

"The business sector is also waiting to get authoritative confirmation that the multicurrency system will remain in place and there will be no premature return to the Zimbabwe dollar.

"There also must be an honouring of the bilateral investment promotion and protection agreements signed by Zimbabwe, as continual flouting of these agreements creates a negative perception in the minds of foreign investors."

The lack of transparency over revenue from the Marange diamond fields has also been a grey area, souring relations between Zanu-PF and MDC. The findings of a parliamentary report made public last month opened the lid on the extent of the gross mismanagement and looting of diamonds in Marange.

In an effort to raise revenue, the cash-strapped unity government has had to place the burden on workers and companies. Taxes, pension contributions and mining royalties have all been increased in an effort to make ends meet.

The Income Tax Bill proposed by Finance Minister Tendai Biti is also likely to present the new government with trouble.

The Bill aims to widen the government's tax base and proposes that Zimbabweans living abroad and offshore investments be taxed.

The Bill aims to amend the current Income Tax Act and, if approved by Parliament and assented to by the president, will become effective on January 1 2014.