“Despite Zimbabwe’s political instability, its economy has been growing due to the recent influx of resources coming out of the ground,” Richter, the head of Africa and frontier markets at Renaissance Asset Managers told CNBC Africa on Tuesday.
According to The African Economic Outlook report, Zimbabwe’s Real Gross Domestic Product (GDP) decelerated to 4.4 per cent in 2012, from 10.6 per cent in 2011. However, it is projected to improve marginally by 5 per cent this year.
The recent economic growth is due to improvements in the country’s mining and agricultural sectors.
“Another reason for the growth is due to the country slowly moving away from the Hyperinflation which took place 3 to 4 years ago and are now moving towards using the US dollar, which will ultimately curtail inflation”, added Richter.
With Zimbabwe’s elections ahead, Richter believes that it will be difficult to judge the country’s future growth, however, its local businessmen believe that the country’s economy will continue to grow no matter which political party wins.
Richter explains that Zimbabweans feel that there is an impasse in government at the moment as its ministers are either from Zimbabwe African National Union – Patriotic Front (ZANU PF) or Movement for Democratic Change (MDC), and they are unwilling to cooperate with one another.
Once the elections are over and one party is in power, greater political stability will be maintained, therefore, benefitting Zimbabwe’s economy as a whole.
South Africa, on the other hand, has recently been strengthening its relations with Zimbabwe, in a low publicised matter, in order to assist Zimbabwe with its growth.
“I think that the South African government does not believe in shouting from the rooftops about its affairs as they firstly want to focus on growing Zimbabwe because you cannot be the best house in the poorest neighbourhood,” exclaimed Richter.
He concluded that while South Africa will still look after its investors interests in Zimbabwe, that focus, however, is short term based as priority now lies in developing South Africa’s neighbouring countries.