Mnangagwa not living up to his promises- system letting him down

All expressed optimism about new opportunities in sectors from mining to telecoms, and financial services to construction, after a decade when China was the only big outside investor.

“When these political changes happened, immediately there was positiveness returning to the economy,” said Adriaan de Lange, managing director at Omnia, a chemicals firm operating in Zimbabwe.

“The potential exists for Zimbabwe to really turn the needle.”

But investors also raised concerns about the election and infighting over facilitating investment between factions linked to Mnangagwa and Vice President Constantino Chiwenga, the army general who led the coup against Mugabe.

The biggest obstacle is the chronic cash shortages that prevent businesses from importing the goods they need or repatriating the profits they hope to make, while portfolio investors can’t get their money out of the stock market.

After raging hyperinflation, Zimbabwe abandoned its own currency in 2009 in favour of the US dollar, but a widening trade deficit and lack of foreign investment have led to currency shortages.

For ordinary Zimbabweans this means winter nights sleeping outside banks in the hope of withdrawing the few dollars that are left, sometimes $20 in coins, often nothing.

The crunch wasn’t solved by the introduction of the “bond notes” which officially trade at parity with the US dollar but have already depreciated to 1.60 to the dollar.

Banking sources say the central bank has a backlog of $600 million in unpaid imports but less than $200 million cash, and the situation is getting worse.

The reserve bank declined to comment for this story.

Hundreds of firms are waiting for the central bank to release their money, banking sources said.

London-listed Fastjet, the low-cost Africa airline backed by easyJet’s Stelios Haji-Ioannou, said it may go bust if it doesn’t recoup some of the $7 million it is owed by the Zimbabwean central bank.

“It’s all at risk because of cashflow,” Chief Commercial Officer Sylvain Bosc told Reuters.

“The demand is there, the opportunities are there. We actually want to expand in Zimbabwe.”

Mnangagwa’s team acknowledges the challenges.

“For 37 years we have been living under one man. It doesn’t change just like that but we are getting there,” said presidential advisor Chris Mutsvangwa.

“For investors it is a question of risk and reward.”

The only way to convince foreign lenders and investors to provide the funds needed to end the currency crisis is if a financing programme can be agreed with the International Monetary Fund, and that will come with painful terms.

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