Zimbabwe economy may be down, but the time to invest is now – Top SA business executive




Tryphosa Ramano is chief financial officer of PPC, South Africa’s largest cement and lime manufacturer with operations in Zimbabwe, Rwanda, the Democratic Republic of Congo and Ethiopia.
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JOHANNESBURG – The evidence of Zimbabwe’s ailing economy is everywhere: Massive unemployment estimated at 85percent; hyper-inflation; shortage of essential food items such as wheat; dependence on imports; cash-strapped locals being at the mercy of the volatile global markets; fallen foreign investment and overall economic stagnation.

Despite the current situation, there are substantial opportunities, thanks to Zimbabwe’s new President Emmerson Mnangagwa’s broad vision for restoring economic and financial stability.

So given Mnangagwa’s indication that his new team was willing to restore economic and financial stability, is now a good time to invest in Zimbabwe? And if it is, what sectors hold the best possible chance for a successful investment?

Yes, this is the time. This is the most opportune time for the South African business people to invest in Zimbabwe. One does not have to wait for this giant to wake up completely, as it may be difficult to find opportunities when the economy has completely recovered.

Zimbabwe provides a useful case study. The lessons learnt from that case study can be applied to all investments in foreign countries.

For many years the country was driven by bad news and uncertainty: When the news continued to be bad, this made people uncertain about the future, and any economic recovery continued to stagnate, and foreign investment barely existed.

Tryphosa Ramano is encouraging investment in Zimbabwe. Photo Supplied

To understand where the opportunities in Zimbabwe’s economy lie, one needs to sieve through what has happened since the government’s land reform policy was fast-tracked 18 years ago.

Under land reform, the government took ownership of all commercial land and, by removing it from the market, crippled both the commercial agriculture sector and industries linked to it.

A large percentage of all raw materials that serviced the industrial and manufacturing sectors came from agriculture, so when they were removed from the market, industrial development and manufacturing collapsed.

The services and industrial sectors also suffered the same fate as they added value to commercial farming outputs.

However, despite the current situation, there are substantial opportunities in the manufacturing sector, if foreign investors were willing to take a long-term view, they could do very well.

So what type of investment strategy should companies adopt as new leaders restore economic and financial stability?

There are opportunities in infrastructure provision, construction, tourism, manufacturing and agriculture. But the country has to get through the administrative aspects of restructuring restrictive policies and parliament has to change the acts that brought them into existence.

That is why South African business people need to seriously consider investing in Zimbabwe as the country’s economy is a sleeping giant in the process of waking up.

The country needs investment in agricultural infrastructure in different sub sectors, namely tobacco, cotton, maize, livestock and horticulture.

Indeed, Zimbabwe’s economic recovery will also be driven by the mining sector. After all, the country is endowed with numerous productive mines, both big and small.

Also, it is the infrastructural development which would enable the sectors to expand and meet the domestic and export requirements.

The manufacturing sector had been under severe stress due to various reasons, including lack of cash injection for re-capitalisation, absence of lines of credit and influx of cheap imports, among others.

Therefore there are opportunities for the establishment of joint ventures between South African and Zimbabwean businesspeople and contribute in the resuscitation of the country. Investment in developing infrastructure in the various productive sectors of the economy for the country would turn its fortunes around.

Infrastructure investment acts as a catalyst for economic growth. You need good infrastructure if you want to grow a town, city, province and even a country. You need roads, railways, airports and a good transit system if you want to attract businesses.

So how will infrastructure drive economic growth? Through investment, incentives, institutions, innovation, skills development and public private partnerships.

For example, we at PPC invested more than $120million (R1.65billion) in different projects in Zimbabwe since 2009 and we look forward to do more.

Recently, we commissioned the Harare plant at a cost of $82m. PPC has a target of generating 40percent of our total revenue from outside South Africa.

Including our second Zimbabwe plant, we have four cement manufacturing plant projects in Africa. The other projects are in Rwanda, the Democratic Republic of Congo and Ethiopia.

With the latest political events providing a promise of things to come, PPC is looking to the future of Zimbabwe, to develop infrastructure and help boost the growth of other economic sectors.

On their part, President Mnangagwa and his team should lay out attractive measures to lure foreign investment into the country.

Improvements in the people’s living conditions would restore Zimbabwe’s economic health, energise investment and build a solid foundation for efficiency and competitiveness.

The rebuilding of Zimbabwe’s economy will be a long process. We are hopeful and positive about Zimbabwe and look forward to a long and strong recovery.

The time to invest in Zimbabwe is now.

Tryphosa Ramano is chief financial officer of PPC, South Africa’s largest cement and lime manufacturer with operations in Zimbabwe, Rwanda, the Democratic Republic of Congo and Ethiopia.