Zimbabwe still high risk but high reward market


“The market has been fairly stagnant in Zimbabwe over the last few years. We had the post-dollarisation euphoria, followed by the economic reality of slightly muddled indigenisation policies, which is essentially sending out a signal to investors of confusion,” Rob Brownlee, head of Africa trading at Avior Research, told CNBC Africa.

“Unfortunately, the government is not really giving us a clear view of the real parameters when looking to invest in Zimbabwe. We haven’t seen too much activity in the last year or so.”

To those that have not been watching Zimbabwe’s market landscape, it could appear to be daunting, but Brownlee added that investors are nevertheless optimistic about the local bourse.


(READ MORE: Zim’s performance broadly satisfactory: IMF)

Investments such as that of Atlas Mara Co-Nvest Limited’s into banking firm ABC Holdings Limited in Zimbabwe is indication of the reward landscape still available in the country. Atlas Mara is an international investment company founded by Bob Diamond, former CEO of Barclays Plc and Barclays Capital.

“The existing players have largely stuck it out because of the potential upside in Zimbabwe, and new entrants have been looking but not really committing at this stage,” Brownlee explained.

Despite the ripe investment landscape, the Zimbabwe consumer remains under pressure amid a liquidity crunch, low Foreign Direct Investment revenues and a country straddling twin deficits.

(READ MORE: Investors ignore risk in favour of value on Zimbabwe’s bourse)

“Under those scenarios, it’s the companies that have big balance sheets, the likes of Delta Corporation, Econet, and the companies that are able to focus on the low-end products, and companies that can actually just tough it out,” said Brownlee.

“They can invest in capital expenditure when times are tough, and essentially we’re looking at the likes of Delta instead of investing heavily in their lagers, they’re now looking at their sorghum beers. Delta’s Chibuku [traditional beer] sales are looking good because the consumer is essentially trading down, and that’s the theme: if you can tough it out and exist within a trading down environment, you’ll probably be a winner.”