Bright future predicted for firms that sit out Zim crisis

Celean Jacobson

Celean Jacobson

Doing business in Zimbabwe may seem risky, but analysts are already looking ahead and predicting a windfall for entrepreneurs who have the patience to ride out the economic crisis.

The shelves are bare and fuel tanks empty after the government ordered shops to slash their prices in half in a bid to bring down inflation.

President Robert Mugabe's government is also threatening to take over businesses, as it did farms.

But companies such as Edgars are sticking it out. And some analysts predict that those who can afford to wait - even if it takes years - will see good returns on investments.

"Zimbabwe's difficulties are a reality. But any rebound will benefit entrepreneurs," says Goolam Ballim, chief economist for Standard Bank.

Figures for foreign investment are not easily available.

"The smaller economy is testimony to shrinking consumption and investment," he says.

But he says mineral-rich Zimbabwe has the capacity to improve.

"There are risks now, but the upside is the rewards if Zimbabwe becomes Africa's next Comeback Kid," Ballim says.

Some believe that for entrepreneurs with deep pockets and strong nerves, this is the time to invest.

"As prices fall, you are able to buy more assets with incredible potential," says Tony Twine, senior economist at Econo- metrix.

He says speculation will intensify with people buying up assets.

"It is not as big as it could be. People are timing their entry for the day before Mugabe leaves."

For businesses that have spent years building their infrastructure, withdrawing is not an option.

One company biding its time is Edgars, which established itself in Zimbabwe over half a century ago.

Edgars Zimbabwe is listed as an independent entity on Zimbabwe's Stock Exchange. The South African parent company Edcon owns a 40 percent share.

"But we don't receive any money because of the difficulties of getting money out of the country," says Mark Bower, Edcon chief executive for group services.

Brian Raftopolous, director of the Solidarity Peace Trust rights group, says: "South African companies are still very much engaged. They are playing hold-up operations. They realise the potential for future growth."

He says insurance giant Old Mutual "can afford to wait it out".

But he warns that the crisis presents a threat to Zimbabwe's sovereignty, especially with the massive reconstruction plan that a post-Mugabe Zimbabwe would need.

"Mugabe has been shouting about the imperialist influence, but he has run the economy down so badly that Zimbabwe is so dependent on foreign aid."

He also cautions against letting Zimbabwe become a "bonanza" for foreign investors eager to take advantage of the desperate situation. - Sapa-AP