Hope versus Hopelessness in Zimbabwe Post-Election Limbo

Peter Oborne writes in The Spectator on the state of things in Zimbabwe 12 days after the election. It's a typically fine Spectator piece. And if the author's sources are sound, reading the article provides some fascinating glimpses into the back room dealings -- with featured players ranging from South Africa's Thabo Mbeki and the US State Department to assorted thugs and officials in the former Rhodesia.

Everything centers on, of course, Robert Mugabe:

Meanwhile, everyone waits for the old man’s next move. I am told by a friend who runs one of Zimbabwe’s very few remaining factories that the mood among the workforce has changed very sharply over the last 48 hours. Hope has turned to bemusement and then — on Tuesday morning — to a silent, pervasive sense of terror, as if something horrible might be just about to happen.

Will Zimbabwe qualify for Sir John Templeton's definition of "maximum pessimism?" (No Mark Mobius sightings have occurred in reading recent news reports.) Will it be a time of "buying when there's blood in the streets?" (Let's hope not.)

Still, we've seen Lonrho PLC position itself for investment in the ravaged country. Lonrho is a pan-African conglomerate that has set-up an investment arm specifically aimed at Zimbabwe -- LonZim PLC. Lonrho trades in London under symbol LONR and LonZim trades under symbol LZM. Both are pretty speculative in my view -- especially LonZim.

Here's a report from this week about Lonrho's latest move. An interesting bit from the article:

White said the group's aim was to become a major player in the Zimbabwean economy across a diverse range of sectors. To that end, last year it had floated Lonzim on London's Aim market, raising $65 million (R506.9 million).

Acquisitions included a 60 percent stake in Celsys, the Zimbabwean-listed chequebook printer, "a key industry that would benefit from a recovery"; Paynet, a payroll systems company that worked with 16 banks; and Millpal, an industrial chemicals supplier.

It was also developing a retail centre in Beira and would invest in the Beira Corridor. The Mozambican city is the closest port to Harare. White said the group expected to conclude another "six to eight Zimbabwean deals once due diligence is completed. We have always been very positive on the Zimbabwean recovery; the timing has been an issue."

I know most of the investment world is focused on Yahoo! and Microsoft. But I find this story much more fascinating. Yes, I realize that probably says a lot about me, but there we go. ;-)

Comments

[Lucas]

I also wonder about the currency- notoriously spiraling out of control. I have no idea how this works with currencies, but I would imagine it would surge based on regime change alone.

[John]

Lucas: You're most likely correct.

It seems to me the way most people arrive at the true value of the Zimbabwe currency is they take Old Mutual (I think, not sure) quote in South Africa and compare it to the quote in Zimbabwe. No one goes by the Zimbabwe government's exchange rates.