Albert Nomuredzo In the money
Confidence is an essential part of the investment decision making process; in fact it is the fabric behind any deliberate action undertaken by man. On the other hand, panic is a state of confusion, anxiety and worries, triggered by a turn of events that is adverse to the well being of an individual or the belief of the existence of such possible adverse turn of events. Unnecessary panic plays a significant part in accelerating the breakdown of any system, in many accident situations most casualties often result from the panic that ensues, which culminates in commotion and prompts people to defy logic.
“Man often becomes what he believes himself to be. If I keep on saying to myself that I cannot do a certain thing, it is possible that I may end by really becoming incapable of doing it. On the contrary, if I have the belief that I can do it, I shall surely acquire the capacity to do it even if I may not have it at the beginning,” observed Mahatma Gandhi.
True, the fundamentals paint a gloomy picture. What is happening on the public front is even worse, delays in payment of civil servants salaries points to severe strain on the fiscus. The broader picture remains gloomy, compounded by abating macro-economic fundamentals with remedies remaining elusive as most issues remain confined to the blue print with little implementation.
Given the challenges that Zimbabweans have gone through and survived, not many will want to relive the experience.
The pinnacle of the hyper-inflationary epoch is by no doubt an experience, which many Zimbabweans want to remain dead and buried in the past. But an era is upon us in which we have managed to establish some level of sanity in our economic and political space. Denying the progress that has been made in varying fronts would be self defeating and cynical. There is a silver lining amidst the dark cloud hovering over our economy. It is easy to quickly assume that the light at the end of the tunnel is but a dream but history aside; politics aside one can see there is a bright light on the other side.
The positives
Cherries in the thorn bush
In the current constrained operating environment riddled with liquidity challenges and a fragile economic footing, there are a number of businesses that have managed to create business models that are (in a small way) doing well.
There exists a handful of good companies with enough solid fundamentals to sustain operational profitability through the difficult times and a few that have export-oriented business models that are immune to shocks (e.g. Padenga, Lake Harvest and horticulture skewed players among others).
Testimony of this is the sustained interest by investors in selected companies operating in the country across all sectors. Investors have recorded noticeable participation in the private sector with debt and equity participation, the likes of African Century, Afrasia, PTA Bank, Afrexim Bank, Atlas Mara and other Private Equity funds have shown an appetite for doing business in Zimbabwe. This bares testimony to the potential that is possessed by many companies operating in the country.
Despite the suppressed operating environment, some have adopted survival strategies that will ensure their survival through the storm. Evidence of experience-induced policy realignment towards the broader economic thrust is starting to manifest in Government initiatives and policies.
In an effort to open up the economy to international investors, the Government has started to re-evaluate critical policy that is vital to sustained partnerships that are essential in the implementation of key policies embedded within the Zimbabwe Agenda for Sustainable Socio-Economic Agenda.
Gone are the days of a one-size-fits-all approach to policy. The Government has on a number of occasions indicated its willingness to look at the application of critical policies like Indigenisation on a deal by deal and sector by sector basis in an effort to attract critical investment.
Responsible authorities have leant from the setbacks due to isolation and antagonistic policies and have now shown interest in rationalising relations and opening up the economy to the international scene. Although more still needs to be done, the steps that Government is taking towards re-engagement are encouraging.
Thriving informal sector shouldering the declining formal sector
Unemployment is rising as industry downsizes to conform to the prevailing suppressed economic trajectory, however, the informal sector has come in with a significant contribution to the welfare and subsistence of the population.
The size of the informal sector could be valued at well over US$5 billion. The level of investment into the sector by both financial and telecoms companies is an indication of the growth in this sector, which, has for some time remained undervalued and somewhat excluded from national income accounting.
Commendable tourism heritage and infrastructure
The tourism sector is on the mend, with improved arrivals being recorded from key markets that had been lost due to the growing stigma that had clouded the country’s image during the period of economic and political challenges.
Efforts by the tourism ministry and stakeholders in the tourism and hospitality industry have boosted the tourism sector. If properly managed and utilised, the country has enough tourism infrastructure and heritage to contribute significantly to the economy.
Labour market and political unrest in alternative investment destinations
Neighbouring South Africa has been rocked by a wave of unrests in the labour market coupled with escalating political efforts and changes in the political landscape; this will have the effects of slightly shifting investor attraction to alternative investment destinations as the risk and return trade off responds to prevailing changes. Zimbabwe has the right business environment and infrastructure to accommodate investments from investors that are restructuring their portfolios.
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