INSIGHT-Post-Mugabe Zimbabwe ready to frustrate eager investors

(Repeats the history of Friday)

* Zimbabwe holds its election on July 30

* More and more investors are watching the sidelines

* Cash Crunch and spooking business

* Graphic of the economy: tmsnrt.rs/ 2NEaW4j

* Currency graph: tmsnrt.rs/2mwbtLU

By MacDonald Dzirutwe and Joe Brock

HARARE, July 13 (Reuters) – A phone from a European investor is ringing in a Harare restaurant and it's good news: $ 80 million construction agreement has been agreed with the Zimbabwean government. Now just a letter of guarantee from the central bank. It never happens.

President Emmerson Mnangagwa, who took power when Robert Mugabe was de facto deposed last November, tried to seduce investors before the July 30 election, a contest he is the favorite. Mnangagwa, a 75-year-old former Mugabe ally, claims to have already secured $ 15 billion in foreign investment from foreign multinationals, though the pledges are mostly non-binding, badysts say. local. examined the agreements. In May, General Electric said it will look into health care, electricity and transportation in Zimbabwe, while Coca Cola has announced plans to make the country an export center. juice and other products and a source of raw materials.

Most large corporations, however, are waiting after the elections to move, although the atmosphere has already changed since the fall of Mugabe, whose nearly four decades in power have put a promising economy on their knees.

Harare taxi drivers say that they hear more foreign languages ​​in their taxis, businessmen gather around laptops in restaurants, and often sleepy international airport buzzing newcomers.

But, until now, most leave frustrated and empty-handed.

"It's like the Wild West," said the European businessman, paying his bill in US dollars to the delight of a more accustomed waiter to fearsome "bond bonds" introduced in November 2016.

Three days of running between government departments to close the deal, the contract signed in his briefcase is useless because it is not guaranteed by the central bank that he can access the dollars he needs to import equipment.

"It's true, I'd better go and deliver the bad news," he says, getting up to take a taxi to the airport.

Reuters has spoken to more than 20 investors, ranging from multinationals to entrepreneurs, who are interested in entering Zimbabwe for the first time or expanding their business since the swearing in of Mnangagwa.

All expressed optimism about new opportunities in the mining sectors for telecommunications, and financial services for construction, after a decade when China was the only major outside investor.

TURN THE NEEDLE

"When these political changes took place, there was immediately a return to the economy," said Adriaan de Lange, Omnia's chief executive officer. chemical company operating in Zimbabwe.

"The potential exists for Zimbabwe to really turn the needle."

But investors also raised concerns over elections and infighting to facilitate investments between the Mnangagwa factions and Vice President Constantino Chiwenga. against Mugabe.

The main obstacle is the chronic shortage of liquidity that prevents businesses from importing the goods they need or repatriating the profits they hope to realize, while portfolio investors can not get out their money from the stock market.

After blistering hyperinflation, Zimbabwe abandoned its own currency in 2009 in favor of the US dollar, but a growing trade deficit and lack of foreign investment led to currency shortages.

For ordinary Zimbabweans, this means that the winter nights sleep outside the banks in the hope of removing the few remaining dollars, sometimes $ 20 in coins, often nothing.

The crisis has not been solved by the introduction of "bond bonds" that are officially trading at parity with the US dollar but have already depreciated to $ 1.60.

According to banking sources, the central bank has a backlog of $ 600 million in unpaid imports but less than $ 200 million in cash, and the situation worsens.

The Reserve Bank declined to comment on this story.

CASH CRISIS

Hundreds of companies are waiting for the central bank to release their money, bank sources said.

Fastjet, the African low-cost airline backed by Stelios Haji-Ioannou, of easyJet, said it was likely to go bankrupt if it did not recover some of the $ 7 million that She owed money to the Zimbabwean central bank.

"Everything is in danger because of the cash," Sylvain Bosc, commercial director, told Reuters.

"The demand is there, the opportunities are there.We really want to expand to Zimbabwe."

The Mnangagwa team recognizes the challenges.

"For 37 years, we have been living under one man, it does not change like that, but we do," said Presidential Adviser Chris Mutsvangwa.

"For investors, it's a matter of risk and reward."

The only way to convince foreign lenders and investors to provide the funds needed to end the currency crisis is to complete a financing program. Funds, and this will come with painful terms.

A source at the IMF said that in order to obtain funding, Zimbabwe will have to revise its public sector, including a crackdown on rampant corruption and mbad layoffs, which has led to protests in the past.

An agreement to compensate white farmers who have been evicted from their land must also be reached, the source said.

If the ruling ZANU-PF wins the election, Mnangagwa announced that it would reach an agreement with the IMF and introduce a new Zimbabwean currency within 3 to 5 years.

But the leader known as "The Crocodile" has not yet shown any signs of caution, giving officials a 17.5% wage increase in May and spending a 2018 budget with a larger deficit.

UNCERTAIN ELECTION

Even before the IMF begins talks, he will want to see free and fair elections. The opposition protested this week saying that the electoral process was being rigged and that the ballots were printed without their participation.

Mnangagwa is slightly ahead in opinion polls, which are unreliable, but his challenger, Nelson Chamisa, 40, is gaining momentum and the vote can provide no clear winner, which means that a disordered coalition can be formed.

Even though Mnangagwa wins, he does not have a strong grip on ZANU-PF, his powerful Chiwenga MP wants to impose his authority after taking a mbadive risk of leading the blow to oust Mugabe, according to political sources and diplomatic.

Intermediaries on both sides want to be the gateway for investment and block transactions that do not go through their offices, making it difficult for companies to know who they should work with, said several investors.

Part divided with the army on one side and Mnangagwa on the other is not an environment conducive to investment.

"Everyone wants a piece of pie," said the owner of an energy company that has an agreement in limbo because of a dispute between factions lined up at Mnangagwa and Chiwenga.

"They must be cautious.The experience of" little boys "like me sets the tone for how" big boys "perceive risks."

Mnangagwa and Chiwenga do not have responded to requests for comment.

Whoever wins the elections will not have long to make the tough decisions needed to get Zimbabwe's economy back on track before public optimism built on the Mugabe's withdrawal does not go away.

"Do you think that's what I want to do with my life?" said Charity Kambarami, trader on the black market, waving a wad of bond notes in the air

"I would also like to go to work and get paid at the end of the month but there are no jobs. Politicians have promised a lot. We have suffered enough. "