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Insights on Euromoney Zimbabwe Investment Conference


Last week I had the opportunity to attend and co-present a paper at the two-day annual Euromoney Zimbabwe Investment Conference hosted by the Planning and Investment Promotion ministry under the theme, “Moving through the Value Chain”.

In this installment, I therefore have the pleasure of sharing some insights from local and international investors who graced the event. Some focus on banking and related matters, while others refer to general investment dynamics.
Bank Regulation: Banking sector regulation is strong in Zimbabwe but there is need to catch up on the regulation of non-bank financial sector institutions, especially Microfinance Institutions, with particular emphasis on consumer protection.
Investment is a process: Whether it is in banking or any other sector, investment is a multi-faceted process involving promotion, regulation and incentives, among other things.

It is by no means an event. Once investment applications are approved by the Zimbabwe Investment Authority, they usually must to go through a capital raising process.

Investors don’t just show up at the Harare International Airport with bags of cash, ready to deploy it as soon as the investment applications are approved. There will always be a time lag between approval and implementation of projects, so patience is of the essence, because benefits of the majority of approved applications only begin to show up after two or three years.
Trust is a big issue in banking: Wherever money is concerned, issues of trust will arise, whether it’s in mobile banking or traditional brick-and-mortar banking. A story is told of an old lady who, puzzled or perhaps thrown into a state of panic by the ever-present queues at her bank, decided to take matters into her own hands.
She could no longer fully trust the bank with her money, so every day she would go to the bank and withdraw it, count it then redeposit it. In this brave new digital and mobile-centric world, customers can now perform the “withdraw-count-and-redeposit” routine without even setting a foot in the banking hall (I have heard someone calling it a banking “hell”).
Mobile banking does not seek to move banks’ cheese: Banks should not view mobile banking services as seeking to “move their cheese” because there is enough of the action for everyone. Mobile banking business in Zimbabwe is by default regulated by the Reserve Bank of Zimbabwe, for whom banks play an agency role in the current regulatory framework. Banks have various roles to play including managing the relevant trust accounts in such as way that there is no money creation in the mobile banking process, monitoring and reporting suspicious transactions in line with anti-money laundering regulations, performing know-your-customer routines, and playing a risk management role. In any case, with only 1,1 million (about 10%) Zimbabweans having bank accounts while eight million possess mobile phones, there should be huge scope and opportunity to satisfy unmet banking needs by both bank and non-bank financial institutions.
Zimbabwe’s risk profile is exaggerated: For those who have neither the time nor good sense to take a closer look, the country’s perceived risk profile can be hugely misleading because it is based on sentiment — and sentiment isn’t necessarily objective. Sometimes when you ask them, investors cannot put their fingers on any real risks they face, so in the end it becomes a case of “fear of fear”, a self-fulfilling prophesy by any means. Some therefore argue the country deserves a better risk rating because it has fairly good infrastructure, an educated workforce and its macroeconomic fundamentals have stabilised after what some investors have called “the unnecessary decade”. Be that as it may, there are some investors who see that “the owl has no horns” and invest anyway, never mind the scarecrows of sanctions and indigenisation. Such investors tell others, so each year there are less and less informed investors, although for most it is still a waiting, fence-sitting game.
Opportunity is free: Opportunities are everywhere and staring you right in the face. Wherever they are, whether it’s in ICTs, mining or banking, it takes creativity to recognise and exploit them — because they often come disguised as hard work. Poverty is a reflection of attitudes, as much as it is a reflection of lack of creativity.
High literacy rate a big asset: Zimbabwe’s high literacy rate of over 90% is an important asset. Innovators bringing products to market stand a much better chance of getting them adopted than in markets where literacy levels are much lower.
GMO technology is not a silver bullet: The adoption of GMO technology will not on its own result in the automatic improvement of the productivity of Zimbabwean farmers. You still have to get the other side of the equation right by having good extension services, good agronomy as well as provision of good quality, well-timed inputs.
Closing infrastructure gap is not a silver bullet either: An impression is often created that once the infrastructure deficit is sorted out; everything will be “hunky-dory”, enabling economic growth to shoot through the roof. Not so quick, says the World Bank. Infrastructure does not cause growth; it is growth that leads to demand for infrastructure and that’s the way the equation balances, not the other way around.
There is a new paradigm in development financing: Non-governmental organisations (NGOs) are moving away from food aid to food security, and in the process increasingly seeking to develop private financing solutions to development solutions. As they adopt commercial approaches such as loan guarantees, NGOs are reaching out to imagine new links with private sector players such as commercial banks.

NGOs can help to co-ordinate various stakeholders in the agricultural financing value chain, provide “patient capital”, and assist banks with risk management capability by providing technical support in the form of extension services as well as training of organised groups of farmers in rural areas where banks usually fear to tread.

What’s your take on these insights? Weigh in with your insights on omen.muza@gmail.com.

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