"ZIMBABWE will see an economic recovery within months." A pipe dream? Possibly not.

Ian Saunders, CEO of junior gold miner New Dawn, is one of many business people who last week expressed versions of this view. At a conference held by sub-Sahara-focussed asset managers Imara, the consensus was that after the election - due to be held before the end of July - business would get back on track, no matter who wins.

Growth in Zimbabwe took off after the adoption of the US dollar in June 2009 ended hyperinflation and a rate of 7.7% was recorded in 2010. Investors expected big things from Zimbabwe, especially off such a low base, but momentum has dropped. Last year, for example, growth barely breached 4.4%.

Election fever is blamed for the current investment torpor and slowed consumer spending but the biggest impediment to business in the past two years has undoubtedly been the vacillation around indigenisation.

Zimplats, part of the world's second-biggest platinum miner Impala, was in January forced to hand over 51% of its shares - a total of R8.3bn - to a community trust, an employee-ownership trust and the National Indigenisation and Economic Empowerment Fund. Though Implats billed it as a "sale", President Robert Mugabe urged his ministers to renegotiate the deal so no money changed hands.

The country had "lost a year" because of the lack of clarity around the indigenisation process, said Mr Saunders. Expansion at New Dawn is hanging in the balance, and the requisite funding is unlikely to be forthcoming until there is clarity about the policy and its implementation.

Yet despite this, money is flooding into Zimbabwe. The stock exchange has grown 59% in the past five months, according to Imara, as share prices soar at large companies like Delta and Innscor. Last year it grew a paltry 4.48%.

It is a significant trajectory, even if the volumes are a fraction of that of Wall Street or even the JSE. The manually operated stock exchange trades once a day for about an hour, turning over about $2m.

But there is no doubt foreign money is interested, albeit cautiously, in Zimbabwe. A number of South African fund managers, including Investec, have begun to take advantage of the bargain-basement stocks with great upside potential.

Investec investment principal Richard Honey described Zimbabwe as an "exciting country in a transitional phase offering great opportunities".

More than 140 investors came to Imara's four-day show-and-tell, which included trips to factories and mines as well as power-point presentations on the financials of local operations. Repeated reference was made to the vast unexplored mineral wealth, the established infrastructure and the young, educated population.

While the indigenisation requirements are broadly defined, platitudes like "the door is open, come let's talk" have shaken investor confidence. "It doesn't matter what the policies are," said a US-based fund manager. "If we know what we're dealing with, we can work around it. As it stands now it's a moving target."

The issue is particularly onerous for banks, which are required to keep $100m of ready cash with the central bank. Without significant foreign investment, this is a virtually impossible ask. But in this issue as well, the rules are vague.

The deadline for compliance was initially June 2014 but was later relaxed to 2015. Then the banks were asked to submit a road map on how and when they would comply with the thresholds, implying the rules could be tailored. Rumours have since surfaced that the time line would be extended to 2020.

Anton Schaad, a Swiss investor managing a UBS-backed sub-Saharan equity fund, described Zimbabwe as an "interesting destination". He said he was considering a small stake, of about 5% to 10% of his $15m fund.

Another US-based investor, Ailsa Carpenter of Galadriel Capital, was optimistic about the medium-term prospects for the local bourse. "There is a massive output gap between the size of Zimbabwe's economy and its productive potential," she said.

But other than a few tailor-made funds and private investors with deep pockets, a well-honed sense of adventure and willingness to stay put for the long haul, it was clear most wallets were going to remain shut tight until the indigenisation framework became clearer.

Meddling by ministers and spurious efforts by some local companies to derail competitors was another theme at the talks.

Innscor, a conglomerate with a major stake in food retailer Spar - among other industries - was recently charged by the Competition and Tariff Commission for not giving notice of its intent to acquire a majority stake in food retailer National Foods.

The inquiry had led to a slew of negative press and turned out to be unfounded - John Koumides, Innscor CEO, said the commission had been notified and once signed and accepted documentation was produced the accusations and mud-slinging quietly went away.

Another CEO said he had been called late at night more than once to attend meetings with government ministers interested in getting a piece of the company action.

But the expectation of improvement is tangible. A rumour repeated by several Zimbabwean business people was that some of the more progressive MPs had told them - in confidence, naturally - that indigenisation was going to get a radical makeover and the country would adopt a much more business-friendly approach. Some said they had it on good authority Mr Mugabe was going to step down.

But nothing was going to happen until after the July 31 line clearly drawn in the sand.

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Recovery factors in place

Zimbabwe's established infrastructure is one of the biggest selling points for potential investors.

The country also has a highly literate population, a road and rail network and power.

These touches give the country a shine that is lacking in the likes of the Democratic Republic of Congo, another country emerging from a slump.

Starting a project in Zimbabwe, even in remote parts of the country, becomes infinitely more possible because of these factors.

The problem is that Zimbabwe's infrastructure has barely been maintained in more than a decade.

Upgrades are desperately needed.

The National Railways of Zimbabwe is deep in debt and in dire need of extensive rehabilitation. The government is reportedly negotiating with a local company to carry out the work at an estimated cost of $340m but the money still needs to be found.

Analysts Frost & Sullivan said in February that a full revamp of the network, excluding locomotives and trucks, would cost $4.5bn.

Freight that can't be moved by rail is transported by road, which has left much of the 88000km network in a parlous state. About $35m was allocated to road maintenance in 2012 - an earlier estimate put the requirement at $200m.

Just $209m was last year set aside for a $2bn rehabilitation programme.

Electricity is in short supply or delivered erratically.

In March last year, power from Mozambique's Cahora Bassa dam was cut off due to a $75m unpaid electricity bill. The country needs more than 2200MW at peak times but produces about 1300MW - the rest must be imported.

Yet the Zimbabwe Electricity Supply Authority owes about $1bn in electricity imports, loans and outstanding contributions to a joint power project with neighbouring Zambia.

One solution would be for private power producers to come into the market, but concerns around indigenisation have put the brakes on that.

As Zimbabwe becomes increasingly less of an economic basket case, investors' interest in infrastructure projects is being piqued. Scraps of information about new infrastructure projects are turning up in reports overseas. Right now, most projects are in the negotiation phase, but there is little doubt that there will be more movement once uncertainty around policies and processes - especially indigenisation - has been cleared up.

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