It is wise, justified to choose foreign investors carefully

Dec 7, 2010

by Chido Makunike

The recent walkout by British ambassador Mark Canning from a presentation by Indigenisation Minister, Saviour Kasukuwere made for some titillating headlines.

Canning understandably got bent out of shape by Kasukuwere’s impolitic statement that: “Any investment that will be coming from Britain will be looked at very negatively . . . with British investment, I would use the Malaysian parlance, ‘buy British last.’ You ask me why, they come here to invest and put you under sanctions again.”

Canning is reported to have characterised indigenisation in the form spearheaded by Kasukuwere as “crude populism” and said that the minister’s remarks would “send shivers down the spines of investors.”

On a certain level there is nothing surprising about this exchange between the two men. It is merely another manifestation of the overally poor, deeply dysfunctional official relations between Britain and Zimbabwe. Canning reportedly went on say “Indigenisation should be the rule of law.” He is quite right, of course, but I wondered what business it was of a representative of a foreign government to be injecting himself in a domestic policy matter of this type. I cannot imagine a Zimbabwean diplomat doing so in Britain, or it being well received by the people there if one did do so.

So there is something of Cannings’s manner that it was inevitable would get a negative reception from a President Robert Mugabe government that is particularly pricklish about admonitions of any kind from Britain. That the British so often walk into this trap is indicative of both the hypersensitivity of the Mugabe government (‘inclusive coalition government’ if you prefer, ha ha) as well as the failure of successive British governments to deal with their ex-colonies in new, more mature ways. Of course some of those ex-colonies which shout “sovereignty” the loudest also look foolish and open themselves up to being treated like recalcitrant, dependent children by their dependence on the old colonial master for basics like food!

So you have these two countries that are in a close relationship history has thrust on them and which they cannot wish away, but one which is deeply unhappy and suspicion-filled.

As others have pointed out, Zimbabwe is hardly in a position to pick and choose investors at the moment. So in that regard it merely appears like empty bravado and boys’ high school-type machismo for Kasukuwere to talk as if there is a long queue of investors lining up to come Zimbabwe and that those from Britain must get to the back of that long queue.

The truth of the matter, as the “inclusive government” (wink, wink, suppress laughter) has found out in its two years of existence, is that for all sorts of reasons, there is not going to be a rush of investment into Zimbabwe from anywhere any time soon. Zimbabwe’s potential is widely acknowledged, but among both friend and foe, Zimbabwe as an investment destination is a severely battered brand.

Contrary to Canning’s statement about Kasukuwere’s bombast sending chills down investors’ spines, the reality is that there is a whole host of other official actions and statements over many years that would have long scared off all but the most intrepid of foreign investors. Kasukuwere’s rabble-rousing is minor compared to the many other reasons the average investor would not be in any hurry to jump into Zimbabwe at the moment.

Having said all this, Kasukuwere is more realistic about the investment import of the poor Britain-Zimbabwe official relationship than Canning appears to be. Hot-headed as his statements may be, they implicitly and correctly acknowledge that there is unlikely to be a flood of investment from Britain anyway, given the poisoned atmosphere between the two countries. Kasukuwere’s careless words about British investment show a “we have nothing to lose” attitude and that is about the situation in regards to significant investment from the UK in the near future. The two governments are officially, actively hostile to each other.

Regardless of how much pre-existing British investment there is, and of how much the UK may give to a pitifully, increasingly donor-dependent Zimbabwe in aid each year, the level of suspicion and rancor between the two governments is so deep that it would be foolish to expect that Zimbabwe would go out of its way to welcome or favour British investors, even in its presently impoverished state. I can understand why that country’s ambassador would hope the reverse would be the case, but that would just make him seem na├»ve and out of touch with the reality of the extent of the bad blood between the two countries.

By allowing himself to be so easily goaded by Kasukuwere instead of calmly, coolly pointing out that Zimbabwe has failed dismally to attract significant investment from any quarter, Canning appears to have lost the childish game of “chicken” the two were playing with each other.

More generally, while all countries seek foreign investment, Kasukuwere has a point in implying that a country needs to be careful of the particular mix of its foreign investment. Foreign investment can be a source of economic growth, new jobs, skills transfer and so forth, but it can also be an instrument of control, just like foreign aid.

It is entirely legitimate that a country tries to ensure that the sources of its foreign investment, as well as which economic sectors it targets and to what extent, coincides with whether the source countries are considered friendly or potentially hostile. All countries should and do this.

In addition, it is wise for any country to try to conduct its economic affairs in such a way that is not unduly dependent on any partner country. Particularly for ex-colonies that were forcibly economically tethered to the colonial metropole, it makes absolute sense for them to seek to diversify their economic partnerships beyond and away from that traditional one. Zimbabwe’s current poor economic state does not mean that it should ignore this calculus in its search for foreign investment.

Canning and Kasukuwere, thanks for the entertainment but now calm down. You’re not on the high school playground anymore, you’re grown-ups. Try acting like it boys.

*This article was also published in the Financial Gazette on December 16 2010 as a letter to the editor.


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