Zim joins Africa’s investment surge as region remains attractive

Zimbabwe has emerged as a destination to watch, ranking among the top 10 African countries attractive for future investments, according to a recent KPMG report titled “Doing Deals in Sub-Saharan Africa”.

The southern African country is favoured by 6 percent of the respondents to the KPMG survey.

This positive sentiment is a reflection of the broader optimism surrounding Sub-Saharan Africa (SSA) with the report painting a bright picture for the future, fuelled by a confluence of factors: vast natural resources, a rapidly growing population, and a strong commitment from international investors to expand their presence in the region.

This optimism is echoed by a significant portion of the survey respondents, with over two-thirds (68 percent) anticipating a rise in deal activity across SSA in the coming years.

This confidence stems not only from broader market trends but also from positive experiences — a remarkable 67 percent of those surveyed expressed a willingness to reinvest in SSA based on their past dealings.

The trend is further solidified by the intention of 74 percent of respondents to consider acquisitions or investments in SSA within the next two years.

Notably, this enthusiasm extends to international investors, with 71 percent indicating their interest in participating in the region’s future growth. Furthermore, 77 percent of all respondents are actively considering injecting more capital into existing acquisitions, highlighting a strong commitment to expanding their presence in the continent’s promising markets.

On its part, Zimbabwe has attracted some exciting investments with the steel plant in Manhize being one of the major ones following a $1,5 billion investment.

This week, Caledonia Mining announced that it expects to triple gold output after deciding on a US$309 million single-phase plan to develop the Bilboes project which is expected to yield an estimated 1,5 million ounces of gold based on measured and indicated mineral resources over an initial 10-year life of mine at a sustaining cost of US$968 per ounce.

The KPMG report pinpoints South Africa and Nigeria as the top destinations for future investments, favoured by 50 percent and 30 percent of respondents respectively.

These economic powerhouses boast substantial market opportunities, with Nigeria’s massive population of over 220 million offering a significant consumer base.

Additionally, both countries serve as regional economic hubs, providing access to neighbouring markets and fostering regional integration initiatives.

Their abundant natural resources, including oil, minerals, and agricultural products, further solidify their attractiveness to investors. Zimbabwe also has these in abundance and the country has since discovered gas and oil which should attract investors going forward.

Looking ahead, the KPMG report predicts that oil and gas, consumer goods, and mining will be the most alluring sectors for investors over the next two years (2024/25).

However, the future is not solely focused on traditional resources. Sub-Saharan Africa’s vast landmass and abundant sunshine position it as a prime location for the development of renewable energy.

This sector is experiencing rapid growth, driven by declining long-term costs for renewable technologies despite recent inflationary pressures.

Countries like Nigeria and Kenya are making significant strides in developing off-grid solutions, bringing clean energy to remote areas previously lacking access to electricity. Zimbabwe is also on this path.

South Africa, the continent’s leader in renewable energy development, serves as a prime example. The nation has successfully integrated hydro, solar, and wind power into its energy mix, demonstrating the immense potential for clean energy solutions across the region.

While the pace of development has been slower than in other parts of the world, the commitment from governments and the life-changing potential of improved access to electricity are propelling clean energy as a major driver of future growth.

The International Renewable Energy Agency estimates that average annual investments in the space have grown tenfold in the past decade, and this trend is expected to continue.

“Investments in the renewables segment will increase in the next five years,” affirms the COO of a French private equity firm that recently invested in Uganda, highlighting the confidence and interest in this transformative sector.

Sub-Saharan Africa presents a compelling proposition for investors. With its rich natural resources, a burgeoning consumer base, and a commitment to clean energy development, the region is poised for a period of significant growth.

As M&A activity continues to rise and investors from around the globe take notice, the future of Sub-Saharan Africa shines bright, and Zimbabwe is well-positioned to be a part of this exciting story.-enusinessweekly