BARD Santner Markets Inc, which recently launched a Gold Coin Unit Trust, is sponsoring a major capital markets conference in London, UK, under the theme: The role of capital markets for sustainable growth of the economy: Creating and developing efficient local capital markets.
Zimbabwe is in the process of deepening its capital markets and Bard Santner is taking the lead in spreading the word and attracting investment in Zimbabwe. The best time to invest in Zimbabwe is now.
However, foreign investors have not moved into the country as quickly as expected because foreign investment decisions are often methodically overstructured. One of the major factors cited is perceived too much risk which needs engagement through investment and capital markets forums such as the one being pioneered by Bard Santner.
But risks and profits are inseparable twins: high-risk ventures are frequently associated with higher profits. Zimbabwe, given its multicurrency economy, is one of the most profitable economies in Africa.
Private player analysis reports shows that Zimbabwe is among the countries in Africa with the highest rate of return on inflows of investment. Its main stock market, the Zimbabwe Stock Exchange, was the top performer in 2020 and 2021, while the Victoria Falls Stock Exchange prides itself of being a US$ market.
On the economic front, economic growth prospects are among Africa’s brightest, according to the International Monetary Fund. Good news: sectors where foreign investment could have a comparative advantage, such as mining, agriculture, banking, telecommunications and infrastructure, are among the drivers of current economic growth in Zimbabwe — creating clear investment opportunities for foreign businesses.
The country’s growing, youthful population (63%) constitutes a formidable market. The youthful population contributes to an abundance of labour, which is one of the country’s highest potentials for labour-intensive industrialisation, and lowers production costs, leading to benefits that far outweigh the cost of doing business in the country.
The hourly wage on average is less than 50 cents compared to US$10.49 in UK, US$7.25 in the United States and US$6.57 in Japan. Engaging more foreign companies may help raise wage rates in the country, improve labour market efficiency and generate additional resources for those left behind on the age ladder.
Maximising this good demographic calls for actively engaging Zimbabwe’s structural economic transformation. Zimbabwe’s large deposits of natural resources promise a bright future for developing value chains.
Agriculture and the extractive sectors are linchpins of national, regional and global value chains. Zimbabwe boasts more than 60% of arable land. It has large deposits of minerals, with agriculture and mining sectors combined accounting for about 80 percent of Zimbabwe’s export earnings and around 40% of national GDP.
The top minerals mined in Zimbabwe include gold, platinum, chrome, coal, diamonds, and lithium while top agricultural commodities include tobacco, cotton, maize, sugarcane, macadamia, citrus and cut flowers.
Building sustainable capital markets in Zimbabwe lends credence to the country’s economic transformation agenda. Some of these developments include improvements in macro-economic prudence and overall governance. For instance, evidence from the 2017 Ibrahim Index of African Governance shows that Zimbabwe’s overall governance index improved since 2010 on an annual basis.
This improvement helps to mitigate perceived risks for many investors in the country. Public-private partnerships and investment forums such as Bard Santner’s City of Westminster-sponsored conference should be used to encourage the government to build on this positive trend to maximise foreign investments.
This includes eliminating corruption; improving safety and security; strengthening macro-economic environment, investing in quality education and skill development in science, technology and innovation; and avoiding a “race to the bottom” syndrome, that gives unnecessary tax holidays and waivers to foreign companies.
Investing in Zimbabwe is good business and a sustainable corporate strategy for foreign investors. Advanced and emerging countries’ governments and the private sector should leverage these profitable emerging investment opportunities. Using official development assistance to leverage and de-risk the investment climate in Zimbabwe is also a key component in attracting foreign direct investment. The country can learn from other African countries.
For instance, Japan’s Nippon Export and Investment Insurance (NEXI) initiative to insure a facility in Ghana is a laudable effort that should be scaled-up and supported by other actors and expanded to Zimbabwe as well.
Zimbabwe is also a signatory the African Continental Free Trade Area (AfCFTA) which was formally launched on 7 July 2019. It is expected to be the game changer in regional economic development.
The agreement aims to eliminate tariffs on intra-African trade, reduce unemployment, increase infrastructure development and eventually create a more competitive and sustainable environment for cross-border trade. Regional signatories hope that AfCFTA will encourage a shift away from reliance on primary sector exports towards more sustainable and diversified trade in Africa.
Trade integration allows countries to specialise in the production of goods and services for which they have comparative advantages to exploit economies of scale, thereby improving productivity and growth.
Moreover, encouraging trade in goods from more labour-intensive industries such as manufacturing and agriculture as well as supporting services can increase employment on the continent. Regional integration also promotes movement of capital, huge infrastructure development, mergers and acquisitions.
Private sector actors are working with the government to derisk and improve the country’s investment climate.
Developing industrial strategies and clusters (Sunway City), promoting special economic zones (Victoria Falls), improving energy access (solar farms), facilitating innovative funding, advocating for value chain development and supporting investment promotion through the initiatives such as the Bard Santner UK capital markets conference.
The best time to invest in Zimbabwe is now.
*About the writer: Kaduwo is a researcher and economist. Contact: [email protected] or WhatsApp +263773376128.