- Almost all sectors of Zimbabwe’s economy need immediate investment
- Zimbabwe’s economy is largely driven by the mining, agriculture, and tourism sectors
- Zimbabwe’s main exports are minerals, agricultural produce, and soft commodities
Almost all sectors of Zimbabwe’s economy need immediate investment.
Agro-processing and agro-forestry, manufacturing, tourism, and services like construction, infrastructure, transport, mining, and ICT present a host of investment opportunities. They are also supported through investor-friendly policies and incentives that aim to encourage investment, and also the Government’s objective of making Zimbabwe a net exporter by 2030.
The World Bank said the Zimbabwean economy rebounded in 2021, driven by a recovery of agriculture and industry and relative stabilization of prices and exchange rates. An exceptionally good agriculture season, coupled with slowing inflation and higher remittances boosted domestic demand. Relaxed pandemic restrictions, good vaccination levels, and favourable terms of trade supported stronger industrial production and exports, with exports of minerals expanding by over 51% in a year.
A report published by Lexology on January 18, 2022, Zimbabwe’s economy is largely driven by the mining, agriculture, and tourism sectors. However, because of Zimbabwe’s foreign currency shortages, there is a significant focus on export-oriented and foreign currency-generating activities.
This allows investors, businesses, and the government to retain value and meet the country’s forex needs. Zimbabwe’s main exports are minerals, agricultural produce, and soft commodities. She also has large reserves of chromite, coal, gold, and iron ore, among others. The country is also one of the world’s largest growers of tobacco.
According to research by Mordor Intelligence, Zimbabwe is a signatory of several bilateral and international agreements (MIGA, OPIC, ICSID, and UNCITRAL) that protect the investments of the companies in Zimbabwe. Zimbabwe has cheap educated, and competitive labour, well-developed infrastructure, and easy access to regional and global markets through its membership in AU, COMESA, SADC, COPAC, and CISSA. Zimbabwe offers free movement of investment capital and attractive investment incentives. Zimbabwe allows for 100% Foreign Direct Investment in almost all sectors barring a few.
In an article published by The Herald on March 21, 2022, Finance and Economic Development Minister Prof Mthuli Ncube highlighted that incentives were put in place to encourage investment. These include a five to 10-year tax rebate, zero import duties levied on goods required as raw materials and duty-free import of equipment for business projects.
Agriculture sector
Agriculture is the main anchor of the economy, with the potential to enhance economic turnaround prospects for Zimbabwe. There are also very strong backward and forward linkages between agriculture and other sectors of the economy.
Investment opportunities that exist in the sector include infrastructure rehabilitation and development like irrigation, agro-processing, and agro value chain development. Opportunities for value addition are in the horticulture, livestock, and forestry sectors, among others.
Zimbabwe has good weather conditions and quality soils good for growing horticultural products such as sugar snaps, peas, sugar beans, peaches, nectarines, citrus, strawberries, and cut flowers. Some export destinations include UAE, The Netherlands, United Kingdom, Belgium, Ireland, France, and South Africa.
Mining Sector
Zimbabwe is a mineral resource-rich country, extracting over 40 different minerals. According to ZIMTRADE, the country’s geological make-up is dominated by two prominent features; the Great Dyke and the Greenstone Belts. The Great Dyke is a remarkable 550 km long geological body containing the world’s largest deposits of chrome, the second-largest reserve of the platinum group metals, as well as significant deposits of gold, copper, and nickel.
The mining industry has the potential to spearhead economic growth. Growth opportunities exist within the entire mining value chain from exploration, extraction, beneficiation, and other downstream industries.
To consolidate gains in this sector, the Government has prioritized beneficiation and value addition of all-natural resources, minerals included.
There are many investment opportunities in prospecting and mining various minerals like gold, coal, diamond, granite, and platinum, cutting and polishing of diamonds, Quarrying, and mineral exploration.
Banking Sector
Reports say that the Zimbabwean banking sector has demonstrated resilience against major shocks and has significantly contributed to the transformation of the economy. This is poised for growth, with improved capacity to support the economy arising from policy initiatives implemented by the Government and the Reserve Bank of Zimbabwe (RBZ). The RBZ is at the apex of the banking sector.
Currently, the banking sector comprises 18 banking institutions consisting of 13 commercial banks, one merchant bank, three-building societies, and one savings bank. Additionally, there are 147 registered micro-finance institutions including two deposit-taking micro-finance institutions and one infrastructure development bank.
In Zimbabwe, the introduction of new technology-driven products and corporate finance structures transformed the sector. This has enhanced financial inclusion by embracing mobile technologies, which now reach out to the previously unbanked population.
Zimbabwe achieved full compliance with the Financial Action Task Force (FATF) anti-money laundering and counter financing of terrorism (AML/CFT) requirements in February 2015. This has assisted in boosting domestic and international business confidence, thus raising prospects for unlocking international trade financing windows.
Manufacturing sector
According to the Herald, the 2022 National Budget highlights several fiscal supportive measures and incentives to be implemented to support the growth and competitiveness of the manufacturing sector. Such measures relate to the revision of tariffs for sectors such as agricultural implements, and soap manufacturing. They also cover the establishment of a manufacturer’s rebate and the formation of Special Economic Zones.
The manufacturing sector has few exploited areas where unprocessed agricultural commodities have dominated major exports. Zimbabwe wants to stop this trend by encouraging investment in textiles, leather, and food processing.
The resuscitation of Zimbabwe’s manufacturing sector, and meaningful investment in the other sectors mentioned above, present an exciting opportunity for investors looking at Zimbabwe. The government allows duty exemptions on imported capital equipment and importation of raw materials used in the manufacturing of goods for export. Furthermore, from a fiscal perspective Value Added Tax is also exempted on raw materials for further processing.
The Government recognized that certain sub-sectors in the manufacturing sector require significant investment. These include foodstuffs, drinks, and beverages, textile and ginning, clothing and footwear, paper printing and publishing, metal and non-metallic products, chemical and petroleum products, transport, and equipment.
Infrastructure sector
In addition to the economic areas mentioned above, investment in infrastructure development is growing on the massive infrastructure deficit in the country. The government, facing this infrastructure gap, has become more amenable to private-public partnerships in infrastructure projects. The arrangements allow investors to benefit from implementing projects through a government-backed framework. Zimbabwe has limited access to finance from international financial institutions. This gives other types of financiers and lenders to fill the gap depending on the particular investor’s investment profile and risk appetite.
Technology
The Government has plans to utilize new technologies to transform the country from a resource-based to a skill-based and technology-based economy to revitalize the production structure.
Last year, demand shifted rapidly from traditional on-premise to cloud-based products. This has created supply chain constraints across the sector. Ongoing trade disputes, regulatory changes, and government efforts to protect or stimulate high-tech activities have an impact.
Definitely, in a post-pandemic world, the technology sector will continue to grow as the digitalization of the economy will accelerate further.
According to Spiked Media, Dr. Gift Machengete, the POTRAZ Director-General said with the current inflation pressures, containing operating costs is crucial for operators to maintain profitability as the growth of operating costs poses a threat to operator viability.
“Data and internet services will continue to drive industry growth. The shift towards telecommuting and e-learning will drive demand for data and accelerate the voice-data substitution. The social distancing measures introduced to avoid the risk of exposure and spreading COVID-19 will see increased usage of ICTs as people avoid physical contact and resort to conducting business online,” he said.
He added that the use of Over-the-Top services, such as WhatsApp, Skype, and Viber, is expected to grow in the current economic environment as consumers cut back on communication expenditure. The cause of the decline in letter volumes has been the substitution of paper communication for electronic methods (e-substitution). E-commerce needs to be supported as it is a pillar for postal reform.
“Mobile money services are expected to continue playing a key role in bridging the financial divide by providing safe, secure, and cheap financial services in areas where many Zimbabweans have no access to formal banking systems. Mobile money payments are expected to maintain an upward trend due to the significant increase in the number of financial services offered on mobile money platforms and the implementation of interoperability following the enactment of Statutory Instrument 80 of 2020 on Mobile Money Interoperability,” he said.
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