Investing in Zimbabwe is risky but it could be worth it

Spear Capital, a private equity investment firm, with a stake in Metro Wholesalers and Dendairy in Zimbabwe has been in the country since 2013.  Its managing partner Martin Soderberg talks to How We Made It In Africa. Below is the excerpt that refers to Zimbabwe .

Q-Spear Capital has two investments in Zimbabwe that it concluded in 2013 and 2014 – Metro Wholesalers and Dendairy. Share your thoughts about Zimbabwe from an investment perspective.

A-Metro Wholesalers, a groceries and hardware wholesaler in Zimbabwe, was our very first investment from our first fund in 2013. At the time, Zimbabwe was a US dollar-based economy and things were going very well. Metro had revenues of about USD 70 million and it has grown significantly every year since then. The discussions around the Zimbabwe dollar as official currency started back in 2017. Since then everything has been a bit murky. In 2018, for example, all companies still reported in US dollars but were trading in local currency. It has made it very difficult to work out how well the business was performing.

Dendairy, our other investment, is a big player in Zimbabwe in terms of dairy production. The company had, at the time of investment, started to put funds into a new production line for UHT milk, but ran out of capital. We stepped in. They have since increased production about 10 times.

We are very happy with both investments which were both done in our first fund.

We are currently tracking two or three opportunities in Zimbabwe very closely. I think you can still invest in Zimbabwe. You just have to be very clear that your criteria are being met. There are definitely fewer opportunities now than there were before, but the quality of the assets remains very good. The reasons being that Zimbabwe has a very well-educated population and quite a professional legal system compared to neighbouring countries, especially from a commercial perspective. For example, if Metro has someone owing them money and they are taken to court it can be resolved in quite a reasonable time.

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