It’s a sales pitch as tough as they come: the economy has halved since 2000, unemployment’s at 90 percent and bank withdrawals are capped at $40 a week.
What’s more, the government’s behind on World Bank loan payments and some officials have been sanctioned by the U.S. and Europe.
Welcome to Zimbabwe, where new president Emmerson Mnangagwa wants to sell debt to revive one of the world’s worst-performing economies and end its isolation from international capital markets. The odd thing is, the pitch might just work.
“It is a tall order, but no longer out of the question with the change in leadership,” said Hasnain Malik, the Dubai-based head of equities research at Exotix Partners LLP, who covers Zimbabwe.
Mnangagwa, 75, is mingling with the elite of the capitalist world at Davos this week, two months after replacing Robert Mugabe.
Under Mugabe, 93, who ruled the southern African nation for almost 40 years until the military ousted him in November, Zimbabwe turned from one of the continent’s most promising economies into a virtual pariah state.
His sanctioning of violent takeovers of white-owned farms from 2000 crushed agriculture, the mainstay of the economy, and caused investors to flee.
Inflation surged to 500 billion percent, according to the International Monetary Fund, as Mugabe printed money in a desperate attempt to get out of the hole he’d created.
Hyperinflation only ended in 2009 when Zimbabwe scrapped its worthless dollar and adopted the U.S. version, which is still the dominant currency among a basket of notes accepted as legal tender.
While Mugabe’s exit paves the way for Zimbabwe’s reintegration into the global financial system, bond investors will first want to see credible elections, evidence of more fiscal discipline and a deal with the IMF for financial help, Malik said.
Mnangagwa, a former spy chief who was close to Mugabe throughout his presidency and the nation’s liberation war before that, plans to hold elections within five months and invite international observers, he said in an interview with Bloomberg in Harare, the capital, last week. He’s confident he’ll win.
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