Zimbabwe Review

Reflections on Zimbabwe

Investors still eye Zimbabwe

Posted by CM on March 17, 2008

It is hard to keep a sense of perspective about Zimbabwe’s prospects as a nation in the face of the political repression and the steep economic decline and the hardships. I wince at careless statements about how commercial agriculture “might never recover.”

One reason that Zimbabwe has defied the frequent predictions of “collapse” is how strong an economy it was. It’s underlying strength only becomes more obvious with each passing day that the country limps on, no matter how dysfunctionally, despite all the determined efforts of Mugabe & Co. to kill it.

There is nothing guaranteed about the country’s recovery in the post-Mugabe era. That depends on how much longer the current decline continues, what kind of leadership takes over after Mugabe and so on.

It is hard for people dealing with the immediacy of daily survival issues in Zimbabwe to worry too much about future recovery. But there are eagle-eyed international investors who recognise what good prospects Zimbabwe would offer if it could soon sort out its current mess. Furthermore, even now there are some real gems to be found from investing on its stock exchange:

Investors still eye Zimbabwe
By Michael Hamlyn

An asset management company with offices in Harare reckons that European investors remain interested in Zimbabwe as an investment destination because of the promise of a relatively rapid turnaround in the economy once the politics return to normal.

John Legat, the Harare-based chief executive of Imara Asset Management, part of the Botswana-registered Imara financial services group, reported on positive feedback from presentations in investment conferences in London and Munich.

Legat said that there was a good deal of discussion about the Imara theory that parallels existed between Brazil in the 1980s and Zimbabwe today.

“Despite the country’s problems, international investors have still made impressive gains in Zimbabwe at a time when returns in many developed markets have been disappointing, ” Legat said. “One internationally focused fund with a strong stake in Zimbabwean equities last year made gains of 18% in US dollar terms with an 84% gain over three years.”

He said Zimbabwe still had a robust and relatively sophisticated equity market – with values at bargain basement levels. Seventy-nine companies are listed on the Zimbabwe stock exchange versus 54 in Kenya.

The Imara presentations also pointed out that a wealth of natural resources and tourist infrastructure offer ready-made building blocks for rapid economic revival, given the necessary policy adjustments.

Zimbabwe is not being written off,” Legat said. “It is being carefully scrutinised by private and institutional investors in major European centres.”

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