President Emmerson Mnangagwa, among other top officials, is set to visit the United Kingdom in a sign of thawing relations between Zimbabwe and the Queen.
This presents the country with a unique opportunity to further deepen bilateral relations, seek business prospects and set the pace in securing foreign investments for the country.
However, the excitement has been bruised as the United Kingdom released internal advice to its investors condemning Zimbabwe as a risky place to invest in the business.
A statement released yesterday (17 August) cited human rights violations, corruption, trade restrictions and inflation amongst other pitfalls as risks that are associated with doing business in Zimbabwe.
“Zimbabwe faces continued cycles of economic and humanitarian challenges. A bumper harvest and a post-COVID recovery will bring improvements, but longer-term prospects, and indeed investment opportunities, remain contingent on addressing deep underlying structural challenges.
These challenges include prohibitive and volatile foreign exchange controls, high inflation, fragile property rights, and pervasive corruption.
Necessary currency reforms have been slow, and whilst businesses are currently able to pay overseas suppliers and repatriate profits through the foreign currency auction, this process is slow and unreliable,” said the UK.
The assessment further painted a bleak picture of doing business by further explaining the challenges highlighted.
“Repatriating profits and paying overseas suppliers is cited as the main challenge, and exporters to Zimbabwe should engage with their customers or bank to ensure that this risk is mitigated.
The high and volatile inflation also makes the business environment more uncertain: many businesses price in US dollars but, as discussed above, the supply of foreign currency is erratic.”
“Corruption in Zimbabwe is widespread. Politically connected individuals are often awarded large state contracts, or allocated state-controlled resources, such as foreign currency,” the assessment further stated.
Speaking to this publication, economist, Dr Prosper Chitambara said he agreed with the issues that were raised by the UK and the country has to show more efforts in alleviating these risks.
“Yes, I would agree with assessment although on a look at inflation we have seen some positives around that. Our inflation numbers have been slowing down, which is good but, the risk remains that we could go back to chronic high inflation, especially given the high pressures on government expenditure and on the exchange rate,” he said.
Dr Chitambara further highlighted corruption is high mainly in the public sector, and reforms were critical in the fight against corruption.
“Corruption remains a major challenge. Ultimately, dealing with corruption requires the implementation of key institutional reforms in the public sector and parastatals. There are challenges in our foreign exchange regime, and that also explains why we have seen the widening of the black market premiums and property rights have always been a challenge,” he stated.
The impending visit to the UK by the President presents a major breakthrough in the re-engagement efforts by the second republic. This travel will be the first visit by a Zimbabwean president in more than two decades due to restrictions imposed by the UK on officials.