Want to buy property or shares in Zimbabwe? Just bring along a bag of fertiliser or some cooking oil.
Maybe it’s not quite that easy. But liberalisation of the economy has started and, as a country on its knees desperate for food and “strategic” goods, Zimbabwe has introduced a barter system in return for assets.
Last week the Zimbabwean reserve bank governor issued a monetary policy statement introducing a barter system for essential “strategic imports”, by means of which items can be imported in exchange for domestic assets, such as shares and real estate. Strategic imports include fertilisers, water treatment chemicals, grain, agricultural equipment, fuel, cement, cooking oil, salt, yeast, animal feed and drugs.
It is a neat solution for a country that does not have the foreign exchange to pay for goods it needs. The mechanics of the system have not been revealed yet, but it will probably be managed by the state.
But will anyone want Zimbabwean assets as opposed to cold, hard-currency cash? Some clever investors might jump at the opportunity. John Legat, portfolio manager of Imara’s Zimbawbe fund, says that if Mugabe is ousted, Zimbabwe will turn around — and fast.
“The turnaround will be very quick. You can’t wait for changes to happen … [If you do] you won’t miss the first 10%, you will lose the first 100% return,” says Legat.
In the past few years the Zimbabwean stock market has not done badly considering the country’s political and economic meltdown. Roelfe Horne of Investec Asset Management says the reason for this is that shares are the only asset that will keep up with the hyperinflation in the country.
Legat says the stock market has not lost value in US-dollar terms — quite an accomplishment considering that GDP has halved. But returns are very erratic for foreigners because the Zimbabwean dollar is extremely volatile.
However, if you don’t have any fertiliser lying around, how do you get a piece of the action, considering the exchange controls both in South Africa and Zimbabwe? The trick is first to buy shares in companies listed in both Zimbabwe and South Africa — for example, Old Mutual or PPC. You can buy the shares locally and send them to a broker in Zimbabwe who will sell them and buy a portfolio of local shares.
Low risk
There are low-risk Zimbabwean shares to be bought: many major Zimbabwean companies have interests across several different sectors, because exchange controls have prevented them from expanding abroad. A similar situation existed in South Africa in the 1990s, when Anglo American owned a bank and other companies not related to its core business. So buying shares in a few of these major companies will give you a diversified exposure to the Zimbabwean economy.
“You don’t have to be very clever: just buy some of the larger companies and buy on weakness rather than chase in this environment,” says Legat. If you have a lot of money you want to punt, the Imara Zimbabwe fund has a minimum investment of US$100Â 000 and is aimed at private investors rather than institutions. When this fund was launched a year ago the take-up was so great it had to turn away new inflows within the first two weeks.