Is Robert Mugabe’s health failing? As Zimbabwe’s president celebrated his 90th birthday on February 21, media outlets around the world speculated that Mugabe might actually be weaker than Zimbabwe’s authorities are letting on.
That’s an encouraging sign to the many foreign investors who have been eyeing Zimbabwe but are waiting to see what happens post-Mugabe before they commit funds to a country that many believe offers tremendous potential, even as it is one of the toughest places to invest in right now.
It isn’t just the government’s contentious indigenization program—the platform on which Mugabe campaigned in the last elections but that has reportedly proven more of a dampener on than a boost to the economy— that’s frightened most investors, even those who specialize in Africa, away from Zimbabwe. It’s the country’s weak macroeconomic fundamentals indicating a precarious situation making Zimbabwe particularly subject to the volatility in the global economy.
Nevertheless, the Zimbabwe story is becoming increasingly interesting to a growing number of investment managers, and investors such as Faisal Rafi, head of research at RisCura, a boutique investment firm in London, who are already invested in the country, believe that investing now is a great idea, and it’s just a matter of knowing one’s way around Zimbabwe and navigating the system to take advantage of great opportunities there.
Rafi visited Zimbabwe about a year ago “and we came back quite excited by what we saw,” he said.
He highlighted a number of companies, including OK Zimbabwe, a supermarket chain, and Econet Wireless’s Zimbabwe subsidiary, that are extremely well run and profitable. Their current share prices don’t reflect their true value, he said, and they are trading at a fraction of the multiples at which their African and emerging market peers are trading, even as they’re supported by the same, long-term growth dynamics.
Furthermore, these companies are also in sectors that are not directly subject to the risk that Mugabe’s indigenization policies pose, such as banking, telecom and the consumer sector, all of which are good investment opportunities and are poised for great growth.