Why Invest in Zimbabwe?
A friend has to make a presentation to potential investors on the opportunities for investment in Zimbabwe today. She asked me to outline what sort of case I would make if I were in her shoes. Tough call, but I said I would have a go at it.
The first reason I would put forward at to why that investment in Zimbabwe makes good sense is that I have chosen to invest my own life and that of my family in the country. That was a choice and we have not regretted for one minute. We are making the kind of investment in Zimbabwe that is essential if it is to eventually become the sort of country it has the potential to be. I am working to restore the rule of law, respect for human rights and the sanctity of private property, freedom of expression, freedom of opportunity and a market driven open society. A society where every child has the opportunity to reach for the skies if she chooses to do so.
Are we going to get there, of course, it is only a matter of time. Those who oppose those principles are on the wrong side of history and will ultimately lose out. I do not share the views of the Afro pessimists and believe that Africa is in fact metamorphosing into the continent with the greatest potential today.
Zimbabwe epitomizes that scenario. It has one of the best climates in the world; it may be affected by global warming but two thirds of the country is predicted to be moister although the rest will be drier. Its people are hard working and entrepreneurial. It is the richest country in natural resources per capita in the world with several minerals in world-class quantities. Its tourist potential is virtually untapped. Commercially and from a logistics perspective it straddles the heart of southern Africa. Industrially it is at the center of the largest concentration of mineral resources in the world and has access to markets that now encompass some 250 million people.
Zimbabwe probably has the most open and free economy in Africa - there is no exchange control, no limits on what you can bring in or take out. We have no price controls and the labour market is regulated but dominated by negotiations between organized labour and management. We have a good banking system that is highly competitive and a stock market that is growing and able to serve the need for raising local capital.
The immediate short-term opportunities are associated with the fact that we are emerging from a lengthy period of conflict - associated with a serious and protracted economic collapse. This means that real assets - land and buildings, strategic enterprise and facilities are available at a fraction of their global value. It is estimated that asset values will have to rise five fold before they reflect their real value in today's global economy. Assets; will never be as cheap or accessible.
Unlike many other countries in conflict, we have not been shooting at each other and Zimbabwe still presents a sound infrastructure and great living space. This is no Somalia and is surrounded by countries, themselves emerging from conflicts and collapse but now exhibiting rapid growth and considerable stability.
Then there are specific opportunities - we are potentially a world-class gold producer. We have numerous gold properties that all need investment on a significant scale and present opportunities for substantial returns. Our potential is for a number of large mines and gold sales of perhaps 100 tonnes a year or some $4 billion per annum.
Our platinum resources have already attracted many world-class players - Implats, Angloplats and others. Altogether some $20 billion is being invested in what is now recognised as the most accessible and low cost platinum mines in the world. Link that to the other metals that are associated with platinum and you get the potential for PGM sales in a few years time that will exceed $6 billion a year.
ESSAR has invested in the steel industry and claims that it will be exporting over a million tonnes of steel a year in twelve months. Associated with the steel industry, Zimbabwe has billions of tonnes of high quality iron ore and coal and it is only a matter of time before we see the establishment of bulk ore facilities off the Mozambique coast to take exports from this part of the world to the markets of Asia.
Spain receives some 60 million tourists a year. Southern Africa some 15 million tourists this year. Despite its natural resources, the weather and tourist hot spots, Zimbabwe barely scratches the surface. Our potential is to capture at least a 20 per cent share of regional tourism and therefore rapid growth is possible. Plans are afoot to invest some $3,5 billion in the Victoria Falls area. The three Trans Frontier Parks constitute the largest contiguous conservation area in the world with the greatest diversity that is available anywhere.
If you put all of this together, there is huge potential in all spheres, retailing, support services, financial services, industry, mining, tourism, telecommunications, IT and even in areas such as medicine and higher education.
Do we have problems? Sure, who doesn't? But we are working through them bit by bit and the outcome eventually will be a great place to live, raise a family and make money.
Would I delay to make sure that the future I outline above is secure? Perhaps but in doing so I would be forgoing the very real opportunities that are available to the brave few today.
Bulawayo, 30th July 2011