We have started compiling our 2021Business Opportunities Book and the edition will comer ealier than previous ones. In the book we will feature entrepreneurs in business from the forum focusing on lessons learnt. We will also include tonnes of trending opportunities in the country and also including some researches and analysis.
Zimbabwe has the second largest informal sector in the world with 60% of the population actively involved in the sector and we come second to Bolivia which is at 63%. Of course these are outdated statistics from a survey conducted by IMF in 2012. Chances are high that the rate should have increased or even overtaking Bolivia.
The Covid-19 pandemic has exerted more pressure on the economy with low disposable incomes and job losses. The sector is absorbing everyone who experiences low incomes or job losses. For university graduates, this is the sector of choice as fewer jobs are being created than the number of graduates churned by the formal educational system.
Investment Portfolio and Options
If you are investing in Zimbabwe then you need to consider the following time horizons;
The short term: You need to generate money on a constant basis—preferably a daily basis. This is the most popular time period in the country characterised by kombis, mshikashikas, vending, small scale gold mining, poultry farming, online forex trading, bottle stores, tuckshops, second hand clothes bales, money changing, vehicles selling, rabbit rearing, goat rearing, cross border activities and more. This sector has low investment implying little barriers to entry and exit. Profit margins low and in most cases operators have to be involved in running battles with authorities. An investor in Zimbabwe needs at least one short run business venture for survival purposes.
Medium term: The short term cannot be relied upon for sustainable operations and should therefore be viewed as a stop gap investment venture. One needs a more stable business venture and this is where long term farming such as tobacco, maize, paw paw, cattle rearing, small scale manufacturing, agro-processing, trucks and others come in. This sector is less susceptible to shocks from the environment such as new statutory instruments coming in, Covid-19 or other pandemics and cyclones. One needs to invest more in this sector but being cushioned by the short-term sector whilst building capital and experience from investments in the short term sector.
Long term: This takes time and builds the best sustainable investment incomes. Real Estate, Cattle ranging, bus transport, pension investment, stock exchange investment, large scale mining and manufacturing.
Lets say you are a returning diasporan and got $100k investment. This is how you may decide to invest it;
Short term: Renting a bottle store, butchery or running a tuckshop—an investment of US$5,000
Medium term: Agro-processing, Soap Manufacturing or cattle rearing—an investment of US$20,000
Long term: Borehole drilling rig, growing fresh crops for exports, constructing student accommodation—an investment of US$50,000.
Keep the remainder of the funds and assess how your investment goes. The short-run investment likely to be wiped away due to your lack of experience. The medium term can leave you with losses but ensure you remain with capital infrastructure which means you can hire it out or recuperate at a later point. The same applies to the long term.
Please note, this is just an example and it is not well researched and evidence based. Every opportunity in the country goes through cycles with growth, maturity and decline with sometimes the process repeating over and over again. Generally no low investment opportunity lasts for more than 6 months without a flood of new entries who will drive profit margins down. The bigger the flood of new entries, the more likely policy interventions are likely to come and adversely impact operations—zvihuta case in mind should ring a bell.
One crucial area to consider is how foreign nationals are investing in the country. The Chinese, Nigerians, Congolese, Indians and others. Why are foreigners interested in Zimbabwe? Which sectors bring the greatest return for them? These are the medium and long term investment opportunities.
Crucially, which sectors are being targeted by the white community for investment especially export opportunities? Most whites interested in agricultural value chains for exports to European markets.
We hope the more depth in our upcoming book will inspire you as it will include practical case studies.
Kwaheri
