SA investors pounce on Zimbabwe

zimdollarHARARE Zimbabwe has become the latest frontier of growth for recession-hit South African investors amid indications that several businesses from Africas largest economy are lining up for a slice of the country emerging from a decade of ruinous policies and dabbling in the political wilderness. (Pictured: Man carries bundles of Zimdollars Replacement of the

Investigations by the Zimbabwean on Sunday revealed last week that at least two South African commercial entities are on the verge of concluding or have already sealed deals with Zimbabwean companies while several others are waiting in the wings waiting for the perfect opportunity to pounce.

One of the companies said to be eyeing an expansion of its footprint to Zimbabwe is Shoprite Holdings, South Africas largest retail chain already represented in 17 African countries.

Negotiations for a merger

Authoritative sources confirmed to The Zimbabwean on Sunday that Shoprite had entered into negotiations for a merger with the countrys largest retail group OK Zimbabwe.

Teams from both sides have been talking with a view to enter into a partnership that could result in OK Zimbabwe either becoming part of the South African group or some other arrangement mutually beneficial to the two sides, said a senior OK Zimbabwe official who could not be named for professional reasons.

The official said both sides were anxious to come up with a deal that would add value to the existing operations. Shoprite sees OK Zimbabwe and its wide chain of outlets as a perfect launch-pad into one of Africas brightest economic prospects. In return, OK Zimbabwe wants to tap into the South African groups resource base in terms of product range and infrastructure.

Other Shoprite operations

Shoprite has operations in Angola, Ghana, Madagascar, Malawi, Mauritius, Mozambique, Nigeria, Tanzania, Uganda and Zambia as well as franchises in several other countries. It operates Shoprite, Checkers, Checkers Hyper, Usave, MediRite, OK Furniture, House & Home, Power Express, Hungry Lion, OK Foods, OK Grocer, OK MiniMark, Sentra and Value, and Megasave.

OK Zimbabwe recently issued a cautionary statement advising its shareholders to trade cautiously in its shares due to the ongoing negotiations. Another South African retail giant Pick n Pay is already a major shareholder in Zimbabwes TM Supermarkets.

The Zimbabwean on Sundays investigations also revealed that financial services group Kingdom Financial Holdings had also opened negotiations for a strategic partnership with South Africas First National Bank (FNB).

Scrambling to recapitalise

Banking sources said negotiations between Kingdom and FNB were still at an infancy stage and that the FNB tie-up would suit the Zimbabwean group at a time most local financial institutions were scrambling to recapitalise following the dollarisation of the economy. The Zimbabwean on Sunday could not get a comment from Kingdom about the negotiations.

Financial institutions have until September 30 and the end of March 2010 to increase their capital bases under the phased minimum capital requirements deadlines set by the Reserve Bank of Zimbabwe (RBZ). Under the arrangement, the financial institutions should have met at least 50 percent of their new capital thresholds by the end of September and be fully capitalised by March 2010.

Our sources said the next few weeks could witness an increase in announcements on foreign tie-ups as most local financial institutions were also considering taking the strategic partnership route as they aim to beat the RBZ deadlines. The alternative that of raising recapitalisation funds internally is out of the question, given the tight liquidity conditions in the country.

Surge in investor interest

Stockbrokers said the Zimbabwe Stock Exchange (ZSE) has also witnessed a surge in investor interest from South Africa, with investment giant Investec leading the charge by punters from across the Limpopo and taking up positions on the local bourse.

Efforts to get figures on how much of the ZSE is currently controlled by South African investors were fruitless although the brokers said it had substantially grown since February when Zimbabwes coalition government was formed.

The South Africans have been snapping up shares across all sectors but mainly in mining counters and retail stocks in what is a show of the growing sentiment out there about Zimbabwes long-term prospects. They are obviously looking beyond the current (political) impasse and positioning themselves for the time when the ship has steadied and is clear of the turbulent waters, said a stockbroker who can also not be named for professional reasons.

Zimbabwes political leaders have reached a deadlock over a series of outstanding issues from a power-sharing agreement they signed last year. The main sticking points are President Robert Mugabes unilateral appointment of RBZ governor Gideon Gono and Attorney General Johannes Tomana. Gono is blamed for ruining Zimbabwes economy through five years of reckless money printing and quasi-fiscal activities.

Real investment in capital stock

Respected economic consultant John Robertson however cautioned against focusing on partnerships with South African firms in the commercial sector, charging that what Zimbabwe desperately required at present was real investment in capital stock, not to act as one big supermarket for products manufactured across the border.

We dont become prosperous by selling other peoples products. What the country needs most right now is industry, not commerce, observed Robertson. Zimbabwes industry is presently operating at below 50 percent of capacity and is in desperate need for capital injection to revive production affected by years of costly price controls.

Post published in: Economy

Leave a Reply

Your email address will not be published. Required fields are marked *