'MDC-T chaos spooks investors'

Published: 05 May 2014

Veteran banker Nigel Chanakira says the leadership confusion in opposition party Movement for Democratic Change (MDC-T) will dampen investor confidence.

The Zimbabwe Investment Authority chairman, who is also founder of Kingdom Financial Holdings Limited - now AfraAsia Zimbabwe Holdings Limited - told Business Live, in his capacity as a businessman, that the party's infighting will repel the urgently needed investment in the country.

"This confusion will not do any good to a country that is trying to desperately attract foreign direct investment (FDI)," he said.

"They should put their house in order and form a unified front for the sake of investor confidence. If it means they look for new leadership let it be so," he added.

This comes as the MDC, the only opposition that has packed a punch at President Robert Mugabe's Zanu-PF, has of late been troubled with a splinter group led by secretary general Tendai Biti suspending party leader Morgan Tsvangirai.

In response, Tsvangirai expelled Biti and colleagues from the party.

Analysts have also warned of investors' panic withdrawal from the Zimbabwe Stock Exchange as Tsvangirai went on to call for mass action.

"The high stakes political drama at the main opposition party is definitely going to affect the economy and business as a whole because there is a close correlation between politics and economics," said Takunda Mugaga, an independent economist.

He said the 'expulsion and counter expulsions' in the MDC was eliminating the system of checks and balances, adding that the party was "betraying investors as they have now made it easy for the ruling party to implement any economic reform they wish".

"MDC has in the past been a stabilizer in international relations; case in point the land reform programme and the indigenisation policy. However, without the party the international community now feels a policy risk as the neutralization the opposition offered is now gone," Mugaga said.

He also said scenario will create complex relations for investors "who do not like to work with Zanu-PF".

Issis Mwale, an economic analyst, also noted that the MDC break up is potentially toxic for a country emerging from an economic crisis.

"Tsvangirai needs to act because even donors are going to lose confidence," she said.

Mwale said although Tsvangirai had given the people of Zimbabwe hope, it was quickly diminishing.

"All these squabbles… are scaring investors. FDI is a problem … Tsvangirai party instability has just earned itself a spot on the list of things repelling FDI," she said.

This comes as the country is notorious for wanting to attract FDI but enacting laws that do not do much to attract it.

Among such laws is the indigenisation policy, compelling foreigners to cede 51 percent shareholding to black locals.

Economists say the country needs to "realign" the laws if it is to wriggle out of the economic quagmire.
- Business Live

Tags: MDc-T,