Zimbabwe is ripe for investment – it just needs to be done the right way


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The massive surge in diaspora remittances to Zimbabwe – up to US$1.4 billion last year – makes for an interesting case study of an economy significantly different from others. Not many countries can look to a source of revenue like this that is so substantial – so big that it is a major part of the economy.

“Diaspora remittances are a key source of consumer spend in Zimbabwe. This has surged from US$1 billion in 2020 to US$1.4 billion last year and is on track to surpass this value this year. This presents an attractive opportunity for investors,” says Nyaradzo Nyimo, principal at Spear Capital, who explains that these funds, which come into the country from family members living in other parts of the world, provide buoyancy to various sectors, including the retail environment, since they allow for greater spending by consumers.

While the Zimbabwean scenario of cash injections from diaspora remittances is the most significant, there is a similar trend throughout the continent.

World Bank data shows that the inflow of remittances to sub-Saharan Africa increased by 6.2% to US$45 billion in 2021. It’s just as well, because this surge has coincided with a decline in foreign investment on the continent, says Nyimo.

Foreign direct investment to Zimbabwe dropped from US$194 million in 2020 to US$166 million last year.

With more than 3 million nationals living outside of Zimbabwe, according to the International Organization for Migration, this financial boost from the diaspora is a significant contributor to the local economy and it is an important source of finance for start-ups and emerging companies.

It is against this background that international private equity firm Spear Capital recently completed its investment in the food manufacturing business, Associated Foods Zimbabwe Private Limited (“AFZ”).

The company produces a range of popular food items such as spreads (jams and peanut butter), snacks, cereals and tinned products under the Mama’s and Farmgold brands.

The provision of basic foodstuffs of this sort means that AFZ is providing for the needs of the large consumer market in Zimbabwe.

This is Spear Capital’s second Zimbabwean investment this year. It has also invested in FML Logistics, a Zimbabwean-registered company focused on the transportation of petroleum products in sub-Saharan Africa.

“While we acknowledge that Zimbabwe is a complex market for outside investment, with some even calling this a VUCA (volatile, uncertain, complex and ambiguous) environment, Spear Capital has an experienced team on the ground which understands the market and its challenges,” explains Nyimo.

By definition, these markets require a shift away from traditional management approaches, and a boots-on-the-ground approach where the team is able to engage with staff and customers is often most effective.

Regardless of Zimbabwe’s inflationary environment, and other challenges, Spear Capital has been able to navigate the market by working with experienced teams on the ground, says Nyimo.

“For companies that take the time to understand the market, and to engage with the relevant players on the ground, there are plenty of investment opportunities in Zimbabwe. One can’t ignore the significant contribution of the informal economy, so it is important to be able to tap into this sector as well,” says Nyimo.

Nyimo says the positive surge in remittance funding in Zimbabwe, and across Africa, should be a green light for enterprising investors who can see the many opportunities that exist in these often-neglected economies.

“We remain bullish about the geographies and sectors where we invest,” she says.

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Charles Rukuni
The Insider is a political and business bulletin about Zimbabwe, edited by Charles Rukuni. Founded in 1990, it was a printed 12-page subscription only newsletter until 2003 when Zimbabwe's hyper-inflation made it impossible to continue printing.

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