Zimbabwe’s political deadlock is holding back foreign investment, which could triple if peaceful elections are held, Finance Minister Tendai Biti.
Investors enticed by commodities such as the world’s second-largest platinum reserves are also wary of plans to force large companies to give black Zimbabweans a controlling stake, Biti said in an interview in Johannesburg today. Foreign investment could reach 45 percent of gross domestic product if these issues are resolved, he said.
“What has been lacking is clarity on the indigenization process and regulations, clarity on the political situation,” Biti said. “Is this inclusive government going to last, are we going to have the violence of 2008, is polarization going to continue?”
Biti’s Movement for Democratic Change formed a unity government with President Robert Mugabe two years ago, after presidential elections were aborted because of the high levels of violence. While the coalition has brought Zimbabwe out of recession after a decade, the parties remain at odds about writing a new constitution and holding elections.
Mugabe last month said his party should end Zimbabwe’s coalition government because “some are dragging their feet on elections.” The country may vote on a new constitution by September even though there are disputes within the government, Biti said. “I think the constitution-making process will limp along to some conclusion,” he said.
Zimbabwe will resume getting foreign aid and investment if it holds fair elections in 2011, Yvonne Mhango, an economist at Renaissance Capital, said last month.
The economy grew about 8 percent last year, up from 1.9 percent the year before, as businesses anticipated political improvements and a global recovery spurred appetite for commodities, Biti said.
“Capital is coming in, investment is coming in,” Biti said. “There’s huge interest from all over the world. Capital is fickle and capital is a coward, but capital is also greedy.”
Welshman Ncube, the industry minister from the MDC, has said that indigenization laws will be reviewed, while the indigenization minister Saviour Kasukuwere, a member of Mugabe’s Zimbabwe African National Union-Patriotic Front, says all foreign and white-owned companies must cede 51 percent to black Zimbabweans.
“Overall, there are indications that while indigenization will happen, there will be some flexibility,” said Mhango.