Article by John P. Mkushi and Shephard Kembo
Zimbabwe has become a capital destination of choice once again and this has been given testimony to by the overwhelming high-level engagements and conversations from our current and potential clients seeking information from our Diaspora Advisory investment company. In this instalment, we will seek to decongest, deconstruct and focus on the available investment opportunities in Zimbabwe. At the moment, we have deliberately decided to zero in on four significant and critical sectors of our economy, namely mining, agriculture, wholesale and retail, not forgetting tourism.
The four sectors have historically and perennially demonstrated remarkable contribution towards Zimbabwe’s economic growth as manifesting through Gross Domestic Product (GDP) percentage contribution. So, which sectors to consider for investing in Zimbabwe now that the World Bank has projected an economic growth rate of 6.2%? Let us briefly look at historical authoritative statistical figures.
According to Zimbabwe statistics office figures for the first quarter of 2024, the wholesale and retail trade industry was the largest contributor to GDP with 17.2%, followed by agriculture at 13.2% and mining at 12.65%. It should however be noted that the tourism sector surpassed both agriculture and mining, contributing a total 12% to GDP for the past 9 months cumulative period of 2024, as agriculture was affected by climate change and mining by falling global prices. Would one encourage local and foreign investors including the diaspora to stick to and consider the above economic sectors performance benchmarks as indicative of sectors to target for new and continued investments? Yes, we would encourage investors to invest in the above sectors based on our business and investor advisory and consultancy experience working with various investments and investors in the past.
We will now dissect and analyse each individual sector’s potential to continue being targeted choice investment sectors of the economy. We will look at the four sectors mentioned above, that is wholesale and retail trade industry, mining, agriculture and tourism.
Wholesale and retail trade industry
This industry is expected to continue to dominate and offer handsome return on investment (ROI) and be the largest contributor to the GDP of Zimbabwe. More so, to understand better what has been driving, propelling, scaffolding and sustaining this industry apart from the internal administrative contradictions to do with currency volatility, let us focus mainly on what has been driving such performance in this sector. The wholesale and retail trade industry has mainly and substantially been benefiting from Zimbabwe Diaspora remittances. Instructive and authoritative available statistical figures indicate that Zimbabwe Diaspora remittances hit a cumulative total figure of US$1.9 billion from January to September 2024, which was about 25% of Zimbabwe’s total foreign currency earnings. Why would such a trend be expected to continue? Zimbabweans in the diaspora will continue to send money back home to support their families and this will continue to benefit this particular industry. A better part of diaspora remittances always goes towards purchasing of goods wholesale and retail including a significant portion towards individual houses and properties construction benefiting wholesale and retail trade industry specifically in food and hardware and electrical retail industry.
The other favourable factor for this sector is the dominant informal sector which results in many small corner and street shops as well as street vendors that continue to find informal employment and informal businesses thriving thereby providing the bigger wholesale and retail sector with more customers, the wholesale and retail sector continues to benefit from its accessibility by all customers regardless of disposable income levels. The diverse product range of basic to necessities has helped grow the sector sales and revenues resulting in profitability. A better distribution network has also helped the sector since the wholesale and retail sector players have been able to reach all the four corners of our country.
In spite of the current turmoil and turbulence going on the wholesale sector, the sector still offers very attractive investment opportunities. What may be necessary is for the traditional prayers in the sector to find ways of adapting to current challenges in the economy.
There has been challenges that are faced with the sector that have largely been to do with currency volatility and or instability mainly when it comes to local customers that may be using local currency to buy, competition from small scale informal players who do not have high operational costs and may insist on foreign currency purchases not forgetting the high import costs since most of the goods sold are imported . Investors seeking to enter into this particular sector may have to contend with these challenges and call upon their corporate executives to be innovative and find ways to navigate such a corporate landscape. The difference in management styles, capability and capacity thus has so far seen the major retail players being affected differently in the same current operating environment.
Mining Sector as a lucrative investment
Zimbabwe has large deposits of platinum, chromium, lithium and other minerals, it is the world second largest producer of platinum and has the largest lithium reserves in Africa. Zimbabwe holds quite substantial endowments of close to 40 different minerals, it boasts of top 5 minerals being predominantly platinum group metals (PGM), chrome, gold, coal, lithium and diamonds. It has high quality grade chromium ores estimated at about 2.8 billion tonnes. Zimbabwe is estimated to be between 5th and 8th world largest lithium reserves, last year 2024 it is reported to have exported about 310 000 tonnes of unprocessed lithium. With the recent government legislated intervention on exports of unprocessed lithium, the country is not limited to mining extraction opportunities only but to enhanced investment opportunities that include value addition and beneficiation. Very lucrative investment opportunities within the mining sector value chain. It should be noted that Mining sector continues to be a capital-intensive requirement sector both from initial capital outlay as well as working capital requirements thus providing an opportunity for partnerships and investment opportunity sector.
Agriculture sector
Tobacco, cotton, sugar and horticulture products continue to offer and provide investment opportunities within the agricultural sector. Horticulture is Zimbabwe fifth largest agriculture export earner contributing about 6.5% to total agricultural GDP.
It should be noted that Agriculture through tobacco and mining through gold, nickel and other minerals have always made a plus 50% contribution towards total Zimbabwe exports traditionally and continually. These sectors continue to make significant contributions towards economic growth, bringing in the much-needed foreign currency to the economy. Agriculture is a sector where both individuals and corporates can participate and reap high rewards.
Tourism Sector
Tourism is another investment sector to consider in Zimbabwe. In the last economic year of 2024 tourism contributed a total of about 12% to the GDP surpassing agriculture and mining in the first nine months due to the fact that the two other sectors had been affected by falling global prices for mining and agriculture due to climate change.
In conclusion, it should be noted that this advisory article does not seek to prescribe a one size fits all investment advice, but is purely based on the information available to us as business advisory and consultancy services providers. Each investment opportunity has its own variables like risk appetite and profile which would be considered on a case-to-case basis.
John P. Mkushi and Shephard Kembo are consultants at Globavel International Pvt Ltd. They can be reached at [email protected]/ [email protected]/ [email protected] / [email protected] or Whatsapp: +27 78 389 3757
