RESPECT FOR PROPERTY RIGHTS KEY TO ECONOMIC REVIVAL
We have heard a lot of lamenting of the lack of foreign direct investment into the economy by mainly government officials and businessman alike claiming that this is happening despite the country carrying out enough reforms to warrant a change of heart by potential investors. Clearly the intent to do what is right has been manifested quite adequately by some in the government however it is the action or the walking the walk that is lacking so to speak. In other words we are promising investors the most ideal investment climate yet we are evasive when it comes to issues that really concern investors security of their investments. Events in the last decade did a lot in constructing an image that this country had no respect for property rights as the so called land reform for instance resulted in the confiscation of farms owned by white farmers without consent and compensation. Notwithstanding the violence that was associated with these reforms, it is instructive to note that this trampling on property rights was well publicised throughout the world courtesy of the now globalised media. Now it is against the backdrop this new found infamy that the country has been trying court foreigners to come and invest in its untapped natural resources. Now with such an image we I have to emphasise it is very detrimental to any economy particularly for a developing economy like ours and normally take years to totally eradicate. For instance an investor in Luxembourg or South Korea still views Zimbabwe as a very risky investment destination because the coalition government has not done anything concrete to recompense farmers who had their rights violated. Unfortunately unlike politics property rights are sacrosanct for any country that wishes to endear itself well with investors and risk rating agencies hence religiously defending these rights is paramount. That it is why after hosting a pretty successful investment conference a few months ago there has not been the translation of the enthusiasm shown there into actual investment. Investors are still nervy about investing because there is a great degree of uncertainty concerning security for of their investments which in normal circumstances is their primary concern when making decision to invest. The presence of elements of the previous regime in this government and the recurring threats of further violation of property rights in the mining industry this time has not helped to douse the perception that we do not respect property rights. If investors are never going to be sure if they are going to be in control of their investment then holding back from pouring their money would be quite logical. It will not count for much that we have huge reverses of platinum, coal, and diamonds and so on. We will remain poor as long we allow politics and populism to interfere with the pillars of a market system namely the rights of property owners hence we need to learn from the likes of China. China a previously strict communist state has recently changed tact allowing citizens and foreigners to own property and the results are quite clear to everyone now. China now ranks amongst the top 5 destinations for foreign direct investment in the world and last year as much as $400 billion of such investment found its way into China. It is fast moving away from poverty in part because it now offers the standard safeguards to foreign investors who in turn invested significantly and of course China is now the second largest economy in the world. A lesson we learn from this is that communist policies or nationalisation and foreign direct investment are mutually exclusive. The country’s record as well as political leaders’ rhetoric provides investors with ample proof that the country is not yet ready to embrace the tenets of property rights and in effect it is signalling that foreign direct investment is a mere luxury. Therefore unless the state really deals with this issue regardless of the political ramifications then we could well remain in this quagmire of not getting the investment which we desperately need.
We have heard a lot of lamenting of the lack of foreign direct investment into the economy by mainly government officials and businessman alike claiming that this is happening despite the country carrying out enough reforms to warrant a change of heart by potential investors. Clearly the intent to do what is right has been manifested quite adequately by some in the government however it is the action or the walking the walk that is lacking so to speak. In other words we are promising investors the most ideal investment climate yet we are evasive when it comes to issues that really concern investors security of their investments. Events in the last decade did a lot in constructing an image that this country had no respect for property rights as the so called land reform for instance resulted in the confiscation of farms owned by white farmers without consent and compensation. Notwithstanding the violence that was associated with these reforms, it is instructive to note that this trampling on property rights was well publicised throughout the world courtesy of the now globalised media. Now it is against the backdrop this new found infamy that the country has been trying court foreigners to come and invest in its untapped natural resources. Now with such an image we I have to emphasise it is very detrimental to any economy particularly for a developing economy like ours and normally take years to totally eradicate. For instance an investor in Luxembourg or South Korea still views Zimbabwe as a very risky investment destination because the coalition government has not done anything concrete to recompense farmers who had their rights violated. Unfortunately unlike politics property rights are sacrosanct for any country that wishes to endear itself well with investors and risk rating agencies hence religiously defending these rights is paramount. That it is why after hosting a pretty successful investment conference a few months ago there has not been the translation of the enthusiasm shown there into actual investment. Investors are still nervy about investing because there is a great degree of uncertainty concerning security for of their investments which in normal circumstances is their primary concern when making decision to invest. The presence of elements of the previous regime in this government and the recurring threats of further violation of property rights in the mining industry this time has not helped to douse the perception that we do not respect property rights. If investors are never going to be sure if they are going to be in control of their investment then holding back from pouring their money would be quite logical. It will not count for much that we have huge reverses of platinum, coal, and diamonds and so on. We will remain poor as long we allow politics and populism to interfere with the pillars of a market system namely the rights of property owners hence we need to learn from the likes of China. China a previously strict communist state has recently changed tact allowing citizens and foreigners to own property and the results are quite clear to everyone now. China now ranks amongst the top 5 destinations for foreign direct investment in the world and last year as much as $400 billion of such investment found its way into China. It is fast moving away from poverty in part because it now offers the standard safeguards to foreign investors who in turn invested significantly and of course China is now the second largest economy in the world. A lesson we learn from this is that communist policies or nationalisation and foreign direct investment are mutually exclusive. The country’s record as well as political leaders’ rhetoric provides investors with ample proof that the country is not yet ready to embrace the tenets of property rights and in effect it is signalling that foreign direct investment is a mere luxury. Therefore unless the state really deals with this issue regardless of the political ramifications then we could well remain in this quagmire of not getting the investment which we desperately need.
No comments:
Post a Comment