Country Profile ZIMBABWE
About Zimbabwe
Zimbabwe, officially the Republic of Zimbabwe, is a landlocked country in southern Africa and is known as ‘the Jewel of Africa’ because of its prosperity. With around 16 million inhabitants, Zimbabwe has 16 official languages. Shona, Ndebele, and English are the most commonly used languages, with English being the main language for business.
Since the 11th century, Zimbabwe has been the site of several organized states and kingdoms, as well as a major route for trade and migration. In 1965, the conservative white minority government declared independence from the British government as ‘Rhodesia’.
Today, Zimbabwe is a member of the United Nations, the Southern African Development Community (SADC), the African Union (AU and the Common Market for Eastern and Southern Africa (COMESA).
There are widespread reports of systematic and escalating violations of human rights in Zimbabwe under the Mugabe administration and the dominant party, the ZANU-PF.
Economy
Overview
Zimbabwe is ranked 159 among 190 economies in the ease of doing business, according to the latest World Bank annual ratings. The rank of Zimbabwe averages at 162.6 in the last decade, reaching an all time high of 171 in 2011 and a record low of 153 in 2014.
Current Economic Conditions
Since 2000, Zimbabwe has seized and forcibly redistributed most of the country’s white owned commercial farms. The new occupants, which included black only citizens and several prominent members of the ruling ZANU-PF administration were usually inept, inexperienced, or uninterested in farming — thereby failing to retain the labor intensive, highly efficient management of previous landowners. Short term gains were achieved by selling the land or equipment.
The overall lack of agricultural expertise resulted in severe export losses and negative affected market confidence. Idle land is now being utilized by rural communities practicing subsistence farming.
In 2014 the Africa Progress Panel reported that of all the African countries looked at when working out how many years it would take to double the current per capital GDP, Zimbabwe fared the worst and that at its current development rate it would take 190 years to achieve this.
In 2016, Patrick Chinamasa, finance minister of Zimbabwe, identified “insignificant foreign direct investment and lack of access to international finance” as significant causes for the poor economic performance.
Credit Rating
Zimbabwe has only been assessed by the Sovereign Wikirating Index (SWI) with a credit rating grade CC (14.1 out of 100 points).
The SWI uses public debt, account balance, GDP growth rate, inflation rate and unemployment rate as its rating criteria.
Investment Climate
Overview
While the government of Zimbabwe has implemented a number of measures since 2009 designed to attract foreign direct investment (FDI), many of its macroeconomic policies, such as the indigenisation and economic empowerment laws, are significant deterrents. The country’s commitment to the use of the multi-currency monetary regime, under which the US dollar dominates most transactions, restored some business confidence in the country up to November 2016, but the introduction of a surrogate currency (the bond note) used only for domestic transactions, has reintroduced uncertainties in the economy.
Investment Guidelines
In 2007, Zimbabwe enacted a new Investment Code, the ZIA Act to form the Zimbabwe Investment Authority. The ZIA is an institution born out of the merger of the Export Processing Zones Authority and the Zimbabwe Investment Centre. This was done to create a one stop investment shop for quicker and easier facilitation of investment.
From the recent Investment Guidelines issued by the ZIA:
- Non-discrimination between domestic and foreign investors and among foreign investors
- Effective protection of property
- Transparency and good regulatory practices
- Maintain environmental and social standards
- Promote investment retention
- Avoid mandatory performance requirements
- Facilitate entry and sojourn of personnel
- Pursue high standards of governance
Incentives For Foreign Investors
Fiscal incentives available to investors include:
- Build own operate and Transfer or Build own Transfer Arrangement
- Industrial Park Developer
- Special Economic Zones Licensed Investor
- Tourist Facility in approved Tourist Development Zone
- Manufacturing of a company which exports
Other incentives:
- Duty Exemptions
- VAT
Key Sectors in Zimbabwe
Sector I: Water Supply and Sanitation
Water supply and sanitation in Zimbabwe is defined by many small scale successful programs but also by a general lack of improved water and sanitation systems for the majority of the country. According to the World Health Organisation (WHO), 80% of Zimbabweans had access to improved drinking water sources and only 40% of Zimbabweans had access to improved sanitation facilities.
A number of foreign governments and NGOs are actively working to improve water supply and sanitation through small and large scale infrastructure projects. These organisations include the World Bank, the African Development Bank and the German government.
Sector II: Mining
Zimbabwe is a country rich in diverse minerals with great potential for additional discoveries. Around 60% of the country’s land is said to comprise of ancient rocks, renowned worldwide for hosting rich varieties of minerals resources including gold, base metals and industrial metals.
Industry growth has been around 13% within the last years but in the long term is largely dependent on its ability to attract foreign investment into projects and key infrastructure fundamental to the sustainable development of mining. Additionally, the country has not invested in mineral exploration within the last decade, giving investors the chance to explore Zimbabwe’s mineral wealth.
Sector III: Agriculture
Agriculture contributes around 15.5% of Zimbabwe’s Gross Domestic Product. The sector is characterised by diverse investment opportunities ranging from the production of cash crops and strategic crops to mechanisation, horticulture and the upgrading of agricultural equipment. Besides national programs such as the National Irrigation Rehabilitation and Development Programme, the agricultural sector offers many other opportunities for investment — Agro-Processing and value addition, aqua culture, grain marketing and cash crop farming, just to name a few.
Uhusiano Capital
Established in May 2016, Uhusiano Capital addresses the capital requirement needs for African-based projects and opportunities. The founding principle of Uhusiano Capital is the fundamental belief that commercial capital and impact capital can come together. This interaction can generate sustainable long-term projects in Africa for which both impact capital and commercial capital can be catalysts.
Disclaimer
The contents of this document are communicated by, and the property of, Uhusiano Capital Limited. Uhusiano Capital Limited is an appointed representative of Thornbridge Investment Management LLP which is authorised and regulated by the Financial Conduct Authority (“FCA”). The information and opinions contained in this document are subject to updating and verification and may be subject to amendment. No representation, warranty, or undertaking, express or limited, is given as to the accuracy or completeness of the information or opinions contained in this document by Uhusiano Capital Limited or its directors. No liability is accepted by such persons for the accuracy or completeness of any information or opinions. As such, no reliance may be placed for any purpose on the information and opinions contained in this document. The information contained in this document is strictly confidential. The value of investments and any income generated may go down as well as up and is not guaranteed. Past performance is not necessarily a guide to future performance.
