used to working in risky African markets - are poised to benefit from lucrative investment opportunities if a deal to end Zimbabwe's post-election crisis goes through. With inflation at 11 million percent, the economy in ruins, massive brain drain and property rights subject to political whim, investing in Zimbabwe is not for the risk-averse. But the southern African country is also home to the world's second biggest platinum reserves, 13 million people hungry for long-denied goods and services and a neglected infrastructure the international community may pay to rebuild. And while millions of its highly skilled workers have fled, many may be tempted back by the stability that a deal wresting at least some power from President Robert Mugabe promises. South African companies, many of which have already proved they can make money in risky and conflict-scarred countries such as the Democratic Republic of Congo and Nigeria, are already jockeying for a slice of the post-Mugabe pie. “The only thing Zimbabwe has been exporting is misery,” said Roelof Horne, who manages about $1 billion in pan-African funds for Investec Asset Management. “A booming, growing Zimbabwe run by a government committed to its people's well-being can only be a net positive for the region.” Western countries blame Mugabe for wrecking Zimbabwe's economy and accuse him of rigging elections, charges he denies. And even if the ruling ZANU-PF party and the opposition Movement for Democractic Change (MDC) reach a deal, Mugabe may retain enough influence to stall reform. Clear health warning Control Risks analyst Anne Fruehauf said post-crisis investment should depend on a security and monetary policy overhaul and came with a “clear health warning.” A deal acceptable to international donors could usher in some $1.5 billion in aid and ease political risk across the region, boosting the rand and prompting a re-rating of South African equities, particularly those with Zimbabwe exposure. “We'll see an immediate boost for local stocks,” said one investment banker. “Then there's specific companies that will benefit from an on-the-ground investment perspective.” South African firms, many with small units in Zimbabwe already, have capital that companies in that country cannot raise, and boast a historic, geographic and linguistic edge over other foreigners, having not had political pressure to stay out. “You have the length of service argument - a large number of South African firms are already there and know the market extremely well, which can have a multiplier effect for business partners,” said Fruehauf. Platinum miners are the most obvious and immediate corporate beneficiaries of a stable Zimbabwe despite government steps to nationalize foreign firms, inadequate power capacity, the collapse of the local supply chain and a skills shortage. Impala Platinum, the foreign mining firm with the biggest investment in Zimbabwe, has vowed to pump in cash if the political and economic situation improves. Anglo Platinum also has operations in Zimbabwe and the Financial Times said last week parent firm Anglo American had held secret talks with the MDC over rejigging the mining concessions system should it gain power. And a platinum rush would spawn construction contracts. Construction and engineering firm Group Five's Chief Executive Mike Upton told Reuters the firm was “ready to go” in Zimbabwe and could quickly revive a dormant unit there. Group Five and its rivals Murray & Roberts and Aveng would aim initially to secure contracts with miners but broader infrastructure tenders could follow. Demand The barriers to investment in Zimbabwe are huge: the banking system is in disarray, power shortages are acute and hyper inflation would have to be tamed. A World Bank report ranks Zimbabwe in 152nd place of 178 countries for ease of doing business, and analysts urge caution until the terms of a deal and Mugabe's role in it are clear. “If there is a coalition controlled by Mugabe then it means donors are financing his crazy economic policies,” Moeletsi Mbeki of the South African Institute of International Affairs, said. “There will be no economic rescue.” But while the economy could take years to stabilize, once it does, Zimbabweans will want to go shopping. Zimbabwe has one of the lowest levels of mobile phone use in Africa and a new government could raise foreign exchange fast by selling new licenses to the likes of South Africa's MTN or Vodacom. Standard Bank, the continent's No.1 banking group by assets, has virtually written off profits from its Zimbabwe unit due to soaring inflation, but CEO Jacko Maree told Reuters it was ready to inject capital once a political solution is found. South African retailers Shoprite, Pick ‘n Pay and Woolworths all have experience in Zimbabwe and could quickly open new stores. “Will South African companies immediately open 20 new stores? No. But they are definitely already at the drawing boards,” said a senior banker at the South African arm of a major international investment bank. “If you get a rational approach to monetary policy that very quickly creates a framework for investors.” – Reuters __
