Johannesburg – Zimbabwe needs to revise some of its trade policies if it is to attract the much needed Foreign Direct Investment (FDI).
In an exclusive interview with BizDay one of the leading South African business analyst for Vunani Private Accounts, Viv Govender, said that in comparative analysis in the sub-region Zimbabwe remained a high risk country for investors.
“Unfortunately Zimbabwe does qualify as risky place to invest. A lack of certainty with regards to the indigenisation policy means that an investor will demand a massive return to risk the chance that some or all of his locally based assets may be confiscated” said Govender.
However, Govender dispelled the notion of democracy as a pre-requisite for business and investment to flourish.
“Businesses often operate happily in non-democracies. China is a good example. There are almost no major companies that are staying away due to the lack of democracy in that country. The issue in Africa is more likely the lack of infrastructure and a skilled work force”, added Govender.
The leading analyst said there was “general consensus that democracies are more stable than the alternative. Looking at the Middle East you can easily see the sort of chaos that non democracies can disintegrate into. The basic stability of democracies is positive for business.”
“That said, democracy can often hinder large businesses. In India for example, a few hundred farmers stopped a major car manufacturer from building a factory on their land. This sort of protest is less likely in a place like China”, noted Govender.
The analyst also urged South Africa to take a leading role to ensuring regional economic growth as it is currently the economic powerhouse.
“As the largest and most developed economy in the region, South Africa should play a leadership role obviously. It should be promoting free trade among the region’s economies for one. Though free trade has a bad reputation in some circles, African countries with a few exceptions are simply too small to make a go of it in the current world economy.
“China and India have single cities that are bigger, in terms of population and economy than most African countries. Even a rich region like Europe, with the common market, and North America, with NAFTA, has to work on a regional basis to succeed”, Govender urged.