Mgaxa's demise imminent.

Poised for a post-Mugabe era http://www.businesslive.co.za/ 28 April, 2012 21:24 TINA WEAVIND Business Times At 88 years of age and with suspected prostate cancer, Robert Mugabe is definitely slowing down. His recent two-week trip to Singapore, which caused two cabinet meetings to be called off, was brushed aside by his aides as a mere holiday. But anyone with even a fleeting interest in the country sat up and took notice. Zimbabwe is poised to become one of the biggest recovery stories on the continent, says Chris Hart of Investment Solutions. Hart is of the opinion that regeneration will go ahead but could be delayed if members of the "old guard" take power after Mugabe. He says there is a solid infrastructure base, although there has been no capital expenditure for more than a decade. There is power, there is a road network and the education system hasn't collapsed so skills are available. And while a great deal has broken down there is significant institutional memory that will fast-track growth when the political landscape becomes less obstructive. Zimbabwe has one of the largest reserves of platinum in the world and a wealth of other resources including diamonds, gold, chrome, nickel and coal. Hart suggests that investment in tourism, telecommunications, financial services, transport and retail would come in relatively quickly if the system stabilises. Mugabe is believed to have entered into a "gentleman's agreement" with his 65-year-old Minister of Defence, Emmerson Mnangagwa, that will put him in power when Mugabe steps down. If the veteran of the 1970s armed struggle against British rule does assume control, analysts warn that things could get worse. In the 1980s Mnangagwa was chief of the Central Intelligence Organisation and was instrumental in causing the deaths of thousands of civilians during a campaign to suppress the rival Zapu party. He was recently sent on a mission to Iran where he met with President Mahmoud Ahmadinejad to discuss getting military aid in return for uranium. The UK's Sunday Telegraph reported that Mnangagwa was virtually guaranteed to succeed as long as he successfully campaigns for Mugabe in this year's presidential elections. But several analysts believe that when Mugabe cedes power the current constitution will be followed, which will mean one of the two vice-presidents - Joice Mujuru or John Nkomo - will take over. John Legat, head of asset management at financial services company Imara, says Mujuru will likely take charge since Nkomo has health problems of his own. According to the constitution, elections would then be held in 90 days. However, Legat believes Mujuru could opt to pursue a new constitution, which is nearly complete. This would give her time to put herself forward as a candidate for election and build up a support base. Legat says this scenario will be the most positive for business since Mujuru has in the past two years shown herself to be pro business. He says she and Morgan Tsvangirai, the prime minister of Zimbabwe and president of the opposition Movement for Democratic Change, get on well and are "on the same page". The indigenisation law would probably be amended or scrapped, Legat says. While it had had limited practical effect, it had been egregious for investor sentiment. Still, there is a definite trickle of business moving back to Zimbabwe, and people are beginning to position themselves for a post-Mugabe era. Legat sa ys major changes will be seen when the IMF finally start s to support the country, and that will only happen once Mugabe has gone as there is too much uncertainty with him in power. T he IMF has been engaged in debt rescheduling and increasing its mission in Harare. Despite the indigenisation laws, mining is continuing with the big Impala Platinum and Anglo Platinum operations. Gold, too, is being mined, albeit on a far smaller scale, and diamond, chrome, coal, copper and nickel operations are all continuing but are nowhere near their potential levels of production. Other limited investment is also going ahead. In December, Pick n Pay took a 49% stake in Zimbabwe's TM supermarkets. Group Five is dualising the road between Harare and Bulawayo in a joint venture with the Zimbabwe National Roads Administration. Funded by the Development Bank of Southern Africa, the road will be tolled. Tenders are out to expand power stations to Hwange and Kariba, and Rio Zimbabwe has been given the go-ahead to build a power station. Though agricultural land is owned by the state, lease agreements where tenure is taken up for 99 years are a way to get around this. If security of tenure can be guaranteed by the state, this will carry weight with financial institutions and a move towards corporate farming will likely ensue. Some farming success can already be seen in tobacco and sugar, with BAT Zimbabwe having recently posted excellent results and Tongaat-Hulett having increased its Zimbabwe investment by about $135-million. Zimbabwe has been left behind in Africa's growth story. According to Accenture's Grant Hatch, it is the only country on the continent where poverty levels have consistently increased in the past decade. But change is coming and as Chris Hart says, they don't necessarily need a good system in place to get the regeneration ball rolling. All they need is a system that stops doing harm.