The team from impact investment firm Renew Capital recently undertook a fact-finding mission to Zimbabwe, to meet with local entrepreneurs and lay the groundwork for its impending expansion into the Southern African country. Here is a quick guide to the challenges and opportunities for the private sector in Harare and beyond.
Zimbabwe has made headlines for years due to its inflation, currency issues and fractured banking system. But what is the reality between what the world perceives about the country, and what is happening on the ground?
- Zimbabweans rank among Africa’s most educated. According to the World Bank (2023), the country has “excellent human capital, comparable to that of upper-middle-income economies in sub-Saharan Africa, although some skill shortages are emerging in some sectors”.
- Although Zimbabwe’s startup scene is still small, there is great potential. Innovation hubs like Eight2five in Harare are growing and offering support to local entrepreneurs. The country also has a legacy of entrepreneurship in the technology sector, with the Zimbabwean-founded Econet Group being among the pioneers of mobile telecommunications on the continent.
- The services sector is highly impressive, likely stemming from a strong history in tourism, which is the third-largest sector in the economy behind mining and agriculture, according to the US Department of Commerce.
- Zimbabwe has beautiful weather and a strong agricultural foundation. According to AfricaNews, Zimbabwe registered its largest wheat harvest in 50 years in 2022 (375,000 tonnes) setting the country up to become a “self-sufficient agricultural powerhouse”. The article also states that “the country no longer needs to import wheat to meet its needs, saving up to $300 million in import costs”.
- The Zimbabwean currency currently lacks international exchange value, leading to a high demand for foreign exchange for essential imports.
- Based on Renew Capital’s discussion with local private-sector players, there seems to be a concern about the government’s influence on the banking system.
- Upcoming elections, slated for August this year, have heightened uncertainty about whether the elected government will be able to deliver a stable currency and create the stable political environment needed to build investor confidence.
- Like many countries in sub-Saharan Africa, Zimbabwe has many wealthy citizens but there are few angel investors, angel networks and early-stage VC investors active in the market to fuel the formation and growth of the entrepreneurial ecosystem.
Read more about Zimbabwe’s currency challenges here.
Overall takeaway: Despite the challenges, Zimbabwe presents an opportunity for savvy and resourceful entrepreneurs to make a difference in the country.