The ZSE had been buoyed over the recent past by foreign investors. However challenges soon arose in the economy after the introduction of the bond note. In all fairness there were challenges before that and not all of them economic. The end result is the signs of an exodus of foreign investors from Zimbabwe at a time the country sorely needs investment to rescue the economy.


The Zimbabwe stock exchange has recorded a downturn in foreign business as the crisis worsens. In December 2018 the S&P DJI stopped tracking Zimbabwean domiciled shares and as expected this made the country less attractive as an investment destination. They cited two related  but distinct reasons; foreign currency shortages and the lack of reliability of valuation on the ZSE. Foreign investment is still recorded through Old Mutual which due to its multiple listing (JSE and LSE) can be used as a method to send money in and out of Zimbabwe, by buying the shares on one exchange and selling them on the other.


Edgar’s recently made a move that looked fairly innocent enough but in substance could’ve been interpreted as acceptance that they cannot get their money out of Zimbabwe. The arrangement that Edcon SA had with Edgar’s Zimbabwe is one where the latter would pay the former franchise and other management fees. While the business arrangement is common it is used as a way to extract payments before tax. I’m the new arrangement Edgar’s Zim buys rights to the brands they were paying license fees for all along. So they no longer need to pay license fees to EdCon. It really looks like Edgar’s has accepted that remitting funds in whatever form is proving difficult.


Remitting funds

The chief amongst the reasons has to be the ability to remit funds. It’s really quite simple to think that no investor wants to put money in a place they can’t get it out. Investment is after all about assets. It has proved difficult for companies to remit funds to investors whether as loan repayment and franchise fees or as dividends. The creation of a Portfolio Investment Fund by the Reserve Bank, to guarantee access to foreign currency for repatriation of funds was of little effect as the fund seems to have disappeared.

Forex shortages

Foreign currency shortages while being a major part of the problem highlighted above distinctly bring challenges in doing business. There is little production in Zimbabwe and as such imports rule the day. This includes primary production for simple raw materials. Finance Minister Mthuli Ncube reportedly agreed  a deal in 2018 to guarantee convertibility of our bond and the US dollar at parity but precious little has been said about since then with the Afreximbank website silent on it. The Zimbabwean business environment and has high uncertainty as there are many factors that could go wrong at any time.

Risk vs uncertainty

Risk in itself is not a problem, for in finance we say high risk equals high return. And it’s true in investing, those who accept greater risk are open to greater returns. What investors do not have an appetite for us uncertainty. In a short 7 days in January we saw a fuel price increase, violent protests that involved loss of life, the shutting down of the internet and denial games by some sections of the government which other sections later contradicted. And that was 7 days! This is the sort of stuff investors want to avoid.

Local investment is still viable

We’ve watched between the years 2009 to 2015 as we used a pure multi-currency system that there was a continuous chase for foreign investment. Before the bond note came and changed things forever. This thinking wasn’t isolated to investment, tourism players continued massive efforts to attract the foreign tourist. We however pursued foreign money at the expense of local money when it was the exact same money! In so doing we perhaps set ourselves up for the foreign investor exodus. We have local investors, ready to put $3.8 billion (albeit bond) into Cassava Smarttech.

Charity begins at home is not just a saying but’s principle that should be followed. One cannot fault the foreign investor for withdrawing; rule number one of business is protect your investment. Bad news keeps flooding in and our leaders seem to be coming up short on answers.