Which sectors do you expect to see increased investment and / or financial movement in the next 18 months and why?
Zimbabwe’s economy is largely driven by the mining, agriculture and tourism sectors. However, because of Zimbabwe’s foreign currency shortages, there is significant focus on export-oriented and foreign currency-generating activities. This allows investors, businesses and the government to retain value and meet the country’s forex needs. Zimbabwe’s main exports are minerals, soft commodities and agricultural produce. The country has large reserves of chromite, coal, gold, and iron ore, among others. It is also one of the world’s largest growers of tobacco. Due to the foreign currency earning potential, investment will grow in these sectors to meet the capitalisation requirements of businesses operating in them. These strategic sectors are also typically supported through investor-friendly policies and incentives that aim to encourage investment, with the ultimate aim of achieving the government’s objective of making Zimbabwe a net exporter by 2030. As the consistency and implementation of these policies improves, there will be increased investment and financial movement in these sectors.
Where do you see the key areas of growth or opportunity for businesses operating in your country?
Zimbabwe’s traditional economic performers like mining and agriculture will continue to present opportunities for investment and growth. These sectors are supported by government policies with tax concessions and favourable exchange control treatment being granted to qualifying investors. In addition to the economic areas mentioned above, investment in infrastructure development is growing on the back of a massive infrastructure deficit in the country. The government, facing this infrastructure gap, has become more amenable to private public partnerships in infrastructure projects. These arrangements allow investors to benefit from implementing projects through a government-backed framework. Zimbabwe has limited access to finance from international financial institutions, and this provides an opportunity for other types of financiers and lenders to fill the gap depending on the particular investor’s investment profile and risk appetite.
Which sectors have been most affected by COVID-19 and what have businesses in those sectors done to cope with these changes or potentially benefit from new opportunities?
The tourism and hospitality sectors have been hardest hit by COVID-19 due to restrictions on international and local travel. It is estimated that the tourism sector has lost, or will lose, USD1.1 billion due to the pandemic. To mitigate the costs brought about by the lockdowns and other restrictions, companies operating in tourism and hospitality have devised measures aimed at maximising domestic tourism opportunities and giving employees more flexibility. By offering more competitive packages for locals, this has seen a noticeable spike in domestic tourism. The result is that – even with international travel restrictions – occupancy has improved slightly in many hotels and lodges. It is hoped that with the continued roll-out and access to the COVID-19 vaccine, restrictions on domestic and international travel will be relaxed and business opportunities in the sector will rebound.
In terms of the legal services market, what growth are you seeing on the horizon in the next 18 months? / In terms of legal services, in what areas are your clients requesting more assistance?
From a legal regulatory perspective, there appears to be a shift to “modernise” the legal profession in Zimbabwe. This is demonstrated by more firms being part of global alliances and the regulator consulting with members regarding lessons to be learned from other jurisdictions in the liberalisation of the profession. This can only be positive for the legal services market, as it will further instil a culture of excellence, improve employment opportunities for young lawyers, increase competition and, consequently, enhance the standard of services provided to clients. Zimbabwe has always had a highly educated and motivated population, but due to the difficulties the economy has faced since 2000, many university graduates have either left the country or sought careers in different fields as they could not find employment in Zimbabwe. By embracing international trends in the legal services market, there will be a shift in this trend that will see young lawyers develop into professionals on the same level as their regional and international colleagues.
What do you expect the general business mood to be in your country in the next 18 months?
In the last two decades, Zimbabwe has experienced unprecedented economic decline, hyperinflation and international isolation, particularly with respect to accessing lines of credit. This has affected the general business mood in Zimbabwe as investors have been reluctant to invest in the country and lenders have been reluctant to lend. Looking ahead, however, there is cautious optimism regarding the country’s general business trajectory in the next 18 months.
This can be viewed from two angles: the cautious angle observes whether or not government policies aimed at resolving the macro-economic issues such as curbing high inflation and foreign currency shortages will succeed; whereas the optimistic angle looks at recent infrastructure developments (the modernisation of the Beitbridge border post for example) and more investor-friendly policies by the government and recognises that there are huge opportunities waiting to be explored. The general mood seems to be one that recognises that if the macro-economic shortcomings can be addressed, even if just slightly, businesses, both local and foreign, will have a platform on which to meaningfully develop and grow.