Management & Board of Directors

At this time, several factors are converging to support the view that Zimbabwe currently provides a compelling investment opportunity.

After a decade of economic decline and political unrest, the establishment of a power sharing government and the ongoing process towards drafting a new constitution is expected to pave the way for sustainable political stability. The benefits of this arrangement are already being felt. As the country stabilises, there is great potential in mining, agriculture and industry. The new government is gradually re-engaging the international community and appears to be receiving a good reception.

Zimbabwe has formally adopted the use of multiple currencies including the US dollar and South African Rand among other major currencies. Coupled with the removal of ineffective policies such as price controls, this has created a more stable and favourable operating environment for business after a prolonged period that was not supportive of market forces. GDP growth in 2010 was $5.574 billion and is projected at $8 billion for 2011.

The Zimbabwe Stock Exchange and the economy in general is coming from a very low base and given the expected recovery in the economy, the ZSE is likely to post a superior performance vis-a-vis other frontier markets in Sub-Saharan Africa. The expected growth in the economy is expected to translate into a huge upside performance of the ZSE.

The Zimbabwe Stock Exchange was dollarised during the first quarter of 2009 after the government adopted a multicurrency system to operate in the economy. The re-pricing exercise produced some price distortions and the counters (shares) on the ZSE are still going through a process of price discovery, with most assets being undervalued compared to the intrinsic values of the stocks. Limited capital in-flows to date have depressed the prices of the counters on the stock market. Some foreign investors are still wary of Zimbabwe as an investment destination due to perceived country and political risk. Liquidity has been low on the domestic market, resulting in lower funds being committed to investments. This reduction in demand has also depressed prices on the stock exchange.

These conditions produce an investment opportunity for investors who are prepared to invest in selected currently undervalued assets that may be expected to move towards their higher intrinsic values as liquidity increases, due to the recovery of the economy.

The forces of globalisation are speeding up the transformation of the corporate landscape in the country. Business leaders are already facing more open business environments, expanding regional markets and growing merger and acquisition activity. This will provide realistic entry points for credible investors.

As a result of nearly a decade of economic downturn mainly due to hyperinflation and lack of foreign currency, most companies have been operating at less than 20% of their capacity. With the new economic dispensation that has arrested inflation through dollarisation, there are now better conditions for companies to increase capacity utilisation and grow their businesses.

Market deregulation is creating opportunities in sectors previously closed or semi-closed to outside investors such as utilities, telecommunications, transport, logistics and banking. In addition, exchange control regulations and remittances are now permissive of foreign investments within Zimbabwe.