Do you even know where Zimbabwe is and what is going on there? Many years ago people learned about Zimbabwe for all the wrong reasons. Now you are about to learn some of the right reasons for knowing about Zimbabwe.
There are many political as well as fundamental factors pointing to increased investor interest in this little understood country.
What is the current progress to date in Zimbabwe?
* Political Risk is falling
* Zanu-PF stranglehold on power diminishing
* Multi-party democracy now a reality
* Rule of law and property rights improving slowly; emergence of shadow financial system enabling funding of tobacco farmers on a contract basis for example
* Greater media access being allowed (BBC allowed back in)Economic Reforms prevail
* Medium term economic development blueprint superseding Short Term Economic Recovery Programme
* Cash budget continues; limiting government spending to income
* Complete dollarisation of the economy has removed inflation and currency risk
* No exchange controls
* Old Mutual fungibility resumed; PPC fungibility recently introduced
* Donor support for humanitarian aid de-politicised (and is large vs. Economy)
* Economically viable commodity prices have been key to increasing productivityBusiness Impact
* Management is sensing US$ bloc competition -full steam ahead!
* Unbundling
* Huge increase in capacity utilisation
* Competition forcing prices down
* Working capital in short supply
* Civil servants salaries providing instant domestic demand
* Returning residents from abroad already increasing skills' base
What are the prospects for a Zimbabwe Recovery?
* Huge Mineral Resources
* Platinum: second largest reserves (2.8bn t) after SA but easier to access as closer to the surface
* Gold: low cost producer ($300-$350/oz) Production in '08 8t or 0.28m oz. Reserves 13m t (est) Miners can now sell their gold to anyone (and are). Annual production could return to 1m oz or 28.4t (i.e. revenues of $1bn) fairly quickly Existing underdeveloped mines could raise production to 3m oz (i.e. equivalent to GDP)
* Natural Gas: largest reserves in Southern Africa
* Significant reserves of: Diamonds, Coal, Nickel, Chrome, CopperBroad Industrial Base
* Self reliant due to 1970's sanctions
* Industry still functioning; capacity utilisation up sharply to 30-40% from 10%Agricultural Prospects
* Shift to corporate farming/shadow financial system
* Infrastructure in place (dams etc)
* Security of Tenure being addressed
* Produce now freely tradable -a major incentive to produceDeveloped Financial Sector - though facing global competition with dollarisation
* Banks, building societies, money lenders, asset managers, pension and insurance funds
* Active stock exchange
* Requires recapitalisationWell Educated Workforce
* Large Diaspora in region and internationally -already returning
Some of these factors should be considered when looking at Zimbabwe investments. One thing a prudent investor would do is to retain local advisors with knowledge and experience.
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