Beyond foreign firms exits, wave of optimism sweeps across country

While some foreign-owned firms are making difficult decisions to exit the Zimbabwean market due to operational challenges, a wave of optimism is sweeping across the country’s investment landscape.

A surge of foreign interest is evident, with new businesses establishing roots, a flurry of investment proposals, and a marked increase in inquiries, some analysts and officials have said. The positive trajectory, they believe signals renewed confidence in Zimbabwe’s economic potential.

However, other analysts express concern that the economy has recently exhibited signs of “distress.”

The concerns stem from the belief that the signs could negatively impact business operations and potentially lead to a significant increase in insolvencies.

While uncertainties remain, including currency stability, power shortages, and the emerging threat of climate change, the challenges have not entirely overshadowed the economy’s potential.

The Government’s concerted efforts to streamline regulations, bolster infrastructure, and foster public-private partnerships are paying dividends, attracting foreign investors eager to tap into the country’s vast resources and burgeoning market.

The Zimbabwe Investment and Development Agency (ZIDA) reported this week it issued 200 investment licenses during the fourth quarter of 2024, reflecting a 19,04 percent increase compared to the previous quarter.

During the quarter, the real estate sector dominated with a projected investment value of US$2 billion, accounting for 43,6 percent of the total. The energy sector followed closely, attracting US$1,043 billion in projected investments, representing 22,76 percent of the overall projection.

The inquiries also increased, a testament to the growing interest in exploring business opportunities.

Last year, Zimbabwe welcomed high-level delegations from around the world, most notably a visit from France that included officials from leading French companies.

The Zimbabwe International Trade Fair also broke records, attracting a higher number of investor participants than ever before.

Crucially, the commissioning of various investment projects, supported by foreign capital and complemented by expansion initiatives, demonstrates that there is significant economic activity and growth potential in Zimbabwe.

Zimbabwe presents a wealth of opportunities to global investors, boasting valuable mineral resources, some of the world’s best tourism attractions, a thriving agricultural sector, and a strong human capital base, among other advantages.

Foreign-owned entities, including retail chain Choppies Zimbabwe and global accounting firms, Deloitte and PricewaterhouseCoopers (PwC) and Unilever are some of the companies that recently exited the Zimbabwean market.

Deloitte, one of the world’s big four audit firms, left Zimbabwe in June last year and its local unit, Deloitte Zimbabwe, has since rebranded and is now known as Axcentium after a management buyout.

Following’ PwC exit from Zimbabwe on January 17, 2025, its local partners have transitioned operations to a newly established local firm, Vista Chartered Accountants.

Local retail supermarket Sai Mart, owned by legislator and Deputy Minister of Industry and Commerce, Raji Modi, has assumed control of Choppies Zimbabwe, effective earlier this month.

Choppies said the decision to disinvest in the domestic market was part of its broader strategy to ensure sustainable growth and profitability across its operation.

Standard Chartered Plc was acquired by FBC Bank in 2020, a reflection the evolving business landscape in Zimbabwe and the increasing importance of local partnerships.

It is however, important to acknowledge that some of these exit decisions are not unique to Zimbabwe.

Several multinational corporations, including Unilever, Barclays, and StanChart have made strategic decisions to downscale their operations in certain markets globally.

Such decisions are often driven by a range of factors, including changing market dynamics, internal restructuring, and a focus on core business areas.

Responding to questions from journalists this week during a virtual meeting on the World Economic Forum (WEF) update, Finance, Economic Development and Investment Promotion Minister Professor Mthuli Ncube, said while Government cannot prevent companies from dis-investing, it was encouraged by the readiness of local investors to acquire assets from those that are exiting the market.

“Of course, you cannot stop companies dis-investing, but I am pleased that for some of these dis-investments, we do have ready local investors who are ready to take over those companies.

“You saw it with the audit firm (PwC) that it exited; local partners took over the practice and they continue to be practicing and we are very pleased with that.

“And then if you also look at a company like Choppies, a local investor again is taking over their assets and continuing operating the company.

“So, it looks like we are not short of local investors who are ready to step in,” said Mthuli.

Analysts believe the fact that some local investors are acquiring operations previously held by foreign companies is a significant positive development for attracting further investment. This demonstrates a growing confidence in the local market and can encourage investors, both domestic and foreign, to consider investing in Zimbabwe.

“Foreign investors often find it reassuring when local people invest in their own economy,” economic analyst Carlos Tadya said.

ZIDA chief executive Tafadzwa Chinamo said in the executive summary of ZIDA’s fourth quarter report that investor interest in Zimbabwe “remains strong.”

The agency issued 200 investment licenses in the fourth quarter, surpassing the 149 issued during the same period in 2023 also observed an increase in the number of licenses renewed.

Investments that materialised during the fourth quarter reached approximately US$60 million.

This is a respectable figure, considering that some projects, even after approval, require significant time to materialize due to factors such as securing funding and addressing various technicalities, Tadya said.

Disturbing trends

Economist Eddie Cross, however, observed some disturbing trends that he believes are gradually eroding business confidence and threatening to derail the country’s economic momentum.

The trends could potentially push many businesses towards insolvency and lead to further exits by foreign-owned companies.

“The business conditions in Zimbabwe are very negative at the moment,” said Cross. “Now we have the problem of the currency — we have an undervalued official exchange rate for the local currency and we are dollarised.

This completely contradicts the ‘Zimbabwe is open for business’ mantra because conditions for business in Zimbabwe have deteriorated in the last three years and many firms are facing liquidation.

Despite the introduction of the Zimbabwe Gold (ZiG) last year, Cross observed that the economy has re-dollarised, with approximately 80 percent of local transactions conducted in hard currency.

Former Zimbabwe National Chamber of Commerce (ZNCC) president, Trust Chikohora, echoed concerns that the local economy is facing significant challenges. He said the challenges could create difficulties for companies to sustain operations.

“There are a lot of bottlenecks and it’s difficult to operate — things like electricity supply, water, the roads network, a real functional rail network, high customs regime, taxes are relatively high and there are a lot of changes that keep on happening especially the currency front, the currency is not stable.

“You saw what happened to the ZiG when it was just introduced; this was after the Zimbabwe dollar had been on a free-fall as well. So, when you are doing business at international level, stability is very key because you want to know if you invest so much, say in US dollars, you are likely to get so much out in terms of your return on your investment,” he said.

“If you are a global player and if things become so volatile and you keep making losses, and having things changing all the time you then end up taking a position that maybe this not a market to invest in and you look at other places where the environment looks stable — this is the reality that is there for most of the corporates.,” he said.-ebsiensweekl