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Abu Dhabi, UAESunday 16 December 2018

Zimbabwe seeks to regain its title of being breakbasket for Africa

A new president is seeking to undo the damage of Mugabe reign

People holding Zimbabwean flags celebrate in the street after the resignation of Zimbabwe's president Robert Mugabe on November 21, 2017 in Harare.  AFP PHOTO / Marco Longari
People holding Zimbabwean flags celebrate in the street after the resignation of Zimbabwe's president Robert Mugabe on November 21, 2017 in Harare.  AFP PHOTO / Marco Longari

After two decades of being confined to the edges of the global economy, Zimbabwe's new leaders hope to win fresh markets for their products, including the lucrative UAE.

Zimbabwe already has a brisk trade with the emirates. Between February and March this year, Zimbabwe exported $98.1 million worth of goods and imported $24.8m from UAE, government figures show.

Mostly, agricultural products such as beef, as well as minerals including gold and diamonds were sent to the Arabian Gulf state. Imports were petrochemical products such as fuel and fertiliser. Zimbabwe is also hoping to establish itself on the UAE's tourism radar.

Right now, the landlocked country can use all the incoming money it can get.

"The economy is still in serious trouble, with poor liquidity, large-scale informalisation and dependence on imports among other ills," says Steven Gruzd, head of African Governance and Diplomacy Programme at the South African Institute of International Affairs in Johannesburg.

Last November, Robert Mugabe resigned after nearly four decades in power. Mr Mugabe's ruinous economic policies had pushed Zimbabwe to become almost a failed state. His successor Emmerson Mnangagwa was a longtime Mugabe ally since falling out with his former boss, and is now saddled with undoing a lifetime of policy damage.

While much of the world welcomed Mr Mugabe's exit, Mr Mnangagwa is still regarded warily as another potential autocrat. Mr Mnangagwa is hoping that elections that take place in July will change this and legitimise a new administration.

"Investors are understandably cautious at the moment, but that may change after the polls," says Mr Gruzd.

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Zimbabwean economist Reuben Muzvagwandonga has released a study that shows agriculture alone has lost $17 billion over the past two decades. Much of this is the result of a campaign Mugabe waged of sometimes violent land evictions that saw most of the country's 4,000 or so white farmers forced off the land.

The figure above was only the beginning. As agriculture slowed, processing plants closed their doors. Zimbabwe went from being an exporter of canned food to almost entirely dependent on imports.

"One of the most interesting options now is if you are a domestic producer," says Steven Gamble, a director at international law firm Norton Rose Fulbright and head of their Harare, Zimbabwe office.

The country is struggling with a currency liquidity crisis. It uses US dollars after it scrapped its own monetary unit, the Zimbabwean dollar, a few years ago to stem hyper-inflation. Now a chronic shortage of dollars hurts importers that need hard currency to bring in foreign goods.

Mr Gamble says this may spur local food companies to begin increasing the variety of finished products they sell to meet local demand.

"Whether its peanut butter or cut flowers for the domestic market, I think we are going to see a lot of new Zimbabwean producers now coming to the fore," he says.

It is not only local producers for are eager to grow. Anglo-Dutch consumer group Unilever recently spent $8m refurbishing its factory in Harare. The plant in its glory days had produced household goods from cleaning products to soup, much of it for export.

In the late 1990s, Zimbabwe's economy began to decline, hurting the factory's ability to upgrade equipment and secure raw materials. Eventually the factory quit exports and slowly reduced what it produced for the local markets. With its equipment growing old and decrepit the plant limped on through the Mugabe era, producing a shrinking line of goods.

Now, Unilever sees a turnaround. "We have been in Zimbabwe for the last 75 years and believe in the country’s future," Unilever Africa CEO Bruno Witvoet told the state-run Herald newspaper. "Our confidence is very high."

Already the plant has begun to replace imports of certain goods on Zimbabwean shelves, he added.

Coca Cola, one of the world's largest beverage companies, has also begun upgrading local production. It will spend $65m over the next three years and hopes to turn Zimbabwe into an export hub for its range of drinks. In particular, the US firm wants to capitalise on Zimbabwe's fruit production capacity.

"We have discussed the issue about allocating land to them to produce oranges," Finance Minister Patrick Chinamasa told reporters in May after a meeting with Coca Cola executives. "They have asked for 2,000 hectares of land and we have committed ourselves to accede to their request."

Under Mr Mugabe a deal like this would have been unthinkable. Today, the main route from the south to Harare is still lined with abandoned citrus plantations, their former owners long since gone. The remaining groves still produce oranges. But without care, the fruit either rots on the ground or is stripped by desperate "pickers" to sell along the roadside to passing motorists.

Mr Mnangagwa appears sincere in his desire to change this and return Zimbabwe to its former position as a "breadbasket" for the region and beyond.

"We are now saying to the world, Zimbabwe is now open for business," he told businessmen in Davos, Switzerland earlier this year.

"To do so, it is necessary that we look at all the legislation which we have, which has been constraining business coming into Zimbabwe, so that it is easy doing business in Zimbabwe."