Zim on cusp of economy boom as investments grow
Construction of what will be Africa’s biggest iron ore mine and carbon steel plant in Manhize, Mvuma, is on course and Chinese global steelmaker Tsingshan Holdings Group is undertaking the project
The incumbent Government has created an enabling environment for businesses to
thrive as demonstrated by the growing number of companies reporting healthy profits
while committing to undertake additional investments.
Since its inception in 2017, the administration of President Mnangagwa has made it a
priority to improve the investment climate, enhance the ease of doing business, deepen
engagement and re-engagement with global countries and multilateral and bilateral
partners, and institute reforms for faster and sustainable growth and prosperity of all
citizens.
After nearly two decades of meltdown, compounded by illegal western sanctions and
isolation of Zimbabwe from the global family of nations for such a long time, resolving
the country’s economic fractures was never going to be easy and an overnight job.
Zimbabwe has suffered disinvestment since the turn of the millennium, limited or
virtually no access to external financing while negative publicity and country profile due
to spirited campaigns by western nations scared away new investment.
But the Southern African country sits on the cusp of a miraculous economic turnaround
anchored by previously existing but now expanding investments and completely new
ones benefiting from the Government friendly and supportive policies.
Arguably, it remains a long way to go be everything falls perfectly into line, given the
structural issues that had and still need to be dealt with, but green shoots are appearing
across virtually all sectors of the economy.
Most of the investments across the sectors of mining, agriculture, manufacturing,
tourism, construction, retail and wholesale, financial services and more follow the
Government’s clearly spelt-out medium-term plan, the five-year National Development
Strategy 1 (NDS1) running until 2025.
The strategy is, however, a precursor to the broader ambition, Vision 2030, which seeks
to fundamentally transform Zimbabwe into an upper-middle-income economy, with a
per capita Gross National Income of over US$5000 in real terms by 2030.
A handful of new and expanding investment projects across the economy demonstrate
the vast opportunities investors are seeing in the country and seizing, why the stability
that has started setting in has brought further impetus and confidence going forward.
Zimbabwe’s conglomerate, Innscor Africa, whose operations span across almost all
sectors of the economy is one of many that are looking to start new or entrench their
operation in the economy.
The Zimbabwe Stock Exchange-listed company has planned an additional US$56 million
investment on top of US$70 million spent during its last financial year.
The group’s focus is on broadening product ranges and investment into modern
manufacturing processes, extending production capabilities, as well as ensuring product
and pricing relevance across the market spectrum.
Innscor, already the country’s largest and most successful food producer, with profitable
interests from poultry to maize meal and beverages is now looking to add another unit
Buffalo Brewing Company, early in 2023.
The group’s entry into opaque beer will provide direct competition to Zimbabwe’s largest
beverages company Delta Corporation, which has over the years enjoyed a monopoly of
the market.
However, on its part, Delta has invested in additional capacity for its Chibuku Super at its
Southerton plant, signifying the beverages maker’s confidence in Zimbabwe’s economy
going forward, following a brief tumult as the Government sought to steady the ship
shaken by events of the past.
Delta gets its supplies of barley and sorghum by contracting thousands of local farmers
and in 2021, it bought 40,000 tonnes of barley from 47 contracted farmers while it also
took in 13,500 tonnes of sorghum, grown by 10 000 communal farmers and 50
commercial farmers.
Investment analyst Mr Enock Rukarwa said the relative stability that transpired
following the Government raft of measures in May and June this year have been
encouraging for business.
“Capacity utilisation which has remained circa 50 percent is a clear testimony of the
greater need for capital and working capital expenditure and current stability
necessitates that additional capital outlay,” he said.
Previously soaring inflation and exchange rate volatility had been the major pain for
business organisations, but Government measures brought relief, with monthly inflation
registering four consecutive months of decline, while annual inflation has started
responding as well, after two straight months of retreat.
Following the announcement of a raft of measures by the Government to tame runaway
inflation and exchange rate, the economy has in recent months witnessed stability while
prices for most basic goods either stabilised or started dropping steadily.
The Zimbabwe dollar exchange rate, the major driver of the previous inflation
resurgence, has also been largely unchanged over the past few months, helping to
preserve value for hundreds of thousands of workers who earn in local currency.
According to the latest figures from the Zimbabwe National Statistics Agency, annual
inflation slowed to 268,8 percent in October from 285 percent in September, while
month-on-month inflation has been on a downward spiral over the past four months to
3,2 percent in October.
Month-on-month inflation level has come down to single digit from a peak of 30,7
percent in June 2022, when it was being fueled by the parallel market exchange rate,
which was being driven by excessive money supply.
The cocktail of the Government’s interventions in the economy were aimed at instilling
discipline and curbing speculative behavior, targeting the exchange rate and stability in
the broader macroeconomy.
On its part, the Reserve Bank of Zimbabwe hiked the bank policy rates from 80 percent to
200 percent in June this year, a measure aimed at reducing speculative borrowing and
stabilizing the exchange rate.
Moreover, the central bank introduced gold coins as an alternative investment, helping
to mop up excess liquidity in the market.
The Treasury also rolled out a number of policy measures to foster stability, which
entailed making mining companies pay part of their royalties in local currency and
charging certain duties and levies in local currency to increase its desirability.
The fiscal authorities also started implementing value-for-money audits to prevent
overcharging on public contracts and profiteering that saw contractors offloading their
liquidity on the black market, which send the exchange rate soaring.
This environment will give further impetus to planned and future investments, which
will drive Zimbabwe’s latent but huge economic boom starting now going forward, in
what should spawn an avalanche of new employment opportunities.
Already, Zimbabwe’s largest platinum producer, Zimplats has lined up a US$1,8 billion
capital expenditure programme, with the projects now at different stages of
implementation until the year 2028.
The envisaged investment of US$1,4 billion by Zimplats will see the setting up of
integrated projects, including the development of new mines, expansion of the smelter,
construction of an additional concentrator, base metal refinery, sulphuric acid plant and
the setting up of a 110 MW solar power plant.
According to the Zimplats the Mupani Mine development will cost US$386,2 million, the
third concentrator plant US$133 million, Bimha Mine Upgrade US$82 million, Sulphuric
acid plant US$200 million, expanded smelter US$280 million, PGM base metal refinery
(BMR) plant US$200 million, Hartley Mine development US$289 million, 110 MW solar
power plant for US$201 million and housing project US$20 million.
Elsewhere, the US$1 billion iron and steel plant being set up by China’s Dinson Iron and
Steel Company (DISCO) in Manhize, near Mvuma has progressed well with critical
equipment for the first phase already on the ground after the Government facilitated the
import process.
Another platinum project, Bravura Consortium, has since finished the first phase of
platinum exploration and is awaiting confirmation of the resource.
The Bravura Consortium is a multi-national mining house registered in the Republic of
Dominica, and is domiciled in Ghana, with subsidiaries in Nigeria, DRC, Guinea and
Zimbabwe.
In Zimbabwe, through a mining agreement, the group pledged to spend more than US$50
million to explore and mine platinum.
Karo Mining Holdings parent company Tharisa Capital said it will invest US$391 million
on the first phase of Karo Platinum mine project in Zimbabwe, targeting first ore in mill
(FOIM) for July 2024.
The Karo project is an upcoming Tier 1 Platinum Group Metals (PGMs) mining operation
situated on the Great Dyke of Zimbabwe.
KMH has since issued a pre-listing statement for the issuance of the US$50 million bond
carrying a Tharisa Corporate Guarantee to be listed on the Victoria Falls Stock Exchange
(VFEX).
The Karo project’s successful development will introduce a fourth significant platinum
group metals (PGM) producer, entrenching Zimbabwe as a key global producer and
importantly opening up a significant long-life source of these versatile metals.
Economist Mr Clemence Machadu said the Government made a good decision after taking
an aggressive approach to tackling inflation and exchange rate volatility as well as
ensuring the successful blitz on Covid-19 vaccination, which opened up the economy.
“That also opened up the tourism, hospitality and transportation sectors and their
associated linkages, while also increasing social activities, thereby improving economic
activities,” he said.
He said authorities should continue to anchor and support growth, from the current
stability.
Buoyed by a booming construction industry, brick manufacturer Beta Brick (Zimbabwe),
invested US$5 million in a new plant at its Mount Hampden facility that will increase
production capacity from the current 125 million bricks to a total throughput of 175
million.
Zimbabwe’s construction industry is booming largely as a result of numerous
construction projects launched by the Government throughout the country to address the
housing shortage, improve the state of roads, built water infrastructure and public
administration and educational infrastructure.
Another brick manufacturer, Willdale, said it will invest US$1 million to improve the
production capacities of its plants and machinery in line with increased demand largely
driven by housing projects countrywide.
The company noted that the positive sentiments around the economic growth prospects
in Zimbabwe, a stable exchange rate and declining inflation gives it confidence for the
future.
Buy Zimbabwe managing director Mr Alois Burutsa said the current stability has allowed
companies to thrive, hence they are eager to reinvest in additional capacity.
“Capital goes where it is expected, where there is stability and predictability.
Investments do not want environments that are volatile and unpredictable,” he said.
Mr Burutsa said the current environment where there is tight liquidity management in
the market is the best step the government has taken in a very long time.
“The steps by the Finance and Economic Development Ministry to name and shame
companies that have been fueling exchange rate volatility need to continue and deter
other companies wishing to distract the economic trajectory,” he said.
He said in order for the government to maintain the current stability, the government
should maintain the current tight fiscal space.
Beverages maker, Varun Beverages, says it plans to grow its domestic operation into a
group of companies worth US$500 million, as it responds to the growing demand for its
soft drink brands.
Varun produces a range of soft drink brands under the PepsiCo franchise in Zimbabwe
and is majority controlled by billionaire Indian tycoon, Ravi Jaipuria.
The company has so far injected about US$80 million into modern beverage production
technologies, and exponential demand, along with an improved investment climate had
given it the confidence to inject more resources.
In the Tourism sector, Hotelier African Sun is buoyant to emerge stronger and more
resilient on the back of ongoing hotel refurbishments currently underway, positioning
the group to deliver better value to customers in the years ahead.
Dairiboard Holdings said demand is expected to remain firm in 2022 and the business is
geared to take full advantage of the high demand through increased production capacity
and forward planning for inputs into production.
“The company invested about US$1,5 million in a recently commissioned ammonia plant
that will see growth in ice-cream production, improving product portfolio mix and
margin performance going forward.
The company also invested US$2 million in additional UHT (ultra-high temperature)
filling and packing equipment that will double the capacity for cartonised beverages.
Battery manufacturer Chloride Zimbabwe, a subsidiary of ART Corporation, says it will
embark on strategic investments to increase capacity and expand the distribution
network in the batteries business as the automotive battery demand remains strong.-The Herald
