Of knee-jerk reactions and policy uncertainty

Information and Publicity permanent secretary Nick Mangwana last week
made an announcement that left both local and foreign investors in shock.

He said the government would with immediate effect suspend mobile money platforms and halting trades on the Zimbabwe Stock Exchange (ZSE).

Reserve Bank of Zimbabwe (RBZ) governor John Mangudya had to
make a climb-down on the suspension of mobile money platforms when he
said the move was only targeting illegal foreign exchange traders.

The local bourse, which had become a haven for long term investors, remains shut and Mangwana says “fake counters” are now trading.

The indefinite suspension of the ZSE is not anything new.

Zimbabwe appears to be at war with itself.

The local currency continues to lose value against major currencies and the bourse and the property sector appeared to be the only options that preserve value.

The latter is, however, for investors with deeper pockets but again high voids continue to do the sector harm as the economy implodes.

This feeling of déjà vu has sent wrong signals to Zimbabwe’s re-engagement
agenda and is an affront on property rights and policy consistency.

The country’s capital markets are regulated by the Securities and Exchange
Commission and the central bank is in charge of the financial services sector.

That Zimbabwe’s economy is imploding is there to see.

The International Monetary Fund sees the economy contracting by 10% and independent economists project that it could decline by 12.5%.

The country’s external debt position is precarious and accessing concessionary funding is a nightmare.

Finance minister Mthuli Ncube wrote to the IMF highlighting how dire the
situation is and could get worse.

For many economies, the stock exchange has served as a dashboard to
show economic performance.

Billionaire Warren Buffet can give a lesson on this.

Sadly, for Zimbabwe authorities are now casting the equities market as a
platform for destabilising President Mnangagwa’s administration.

Ironically the latest move to suspend trades on the ZSE is counterproductive
to Mnangagwa’s ‘Zimbabwe is open for business’ mantra.

After taking over from long-time leader Robert Mugabe, Mnangagwa promised to reverse Mugabe’s anti-capital policies, reassuring investors that their investment would be safe.

He said he would repeal the controversial Indigenisation law that was
widely seen as spooking investors as well as improve the country’s ease of
doing business. Little has been done on this front.

Investors, particularly foreign-owned companies like BAT Zimbabwe, have
for years consistently reported on the bottlenecks they have faced in taking
profits back home.

For Mnangagwa who pushed for neo-liberal policies, such delays would railroad his attempts to attract foreign capital.

The suspension of ZSE operations is another not-so-well thought after
intervention by a government badly in need of capital.

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