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Victoria Ruzvidzo Business Focus
Yesterday we reported a big deal on which a London-listed firm Atlas Mara Co-Nvest is injecting US$265 million into ABC Holdings, marking the biggest such deal since dollarisation. The funds will certainly go a long way in recapitalising the banking group, whose benefits will naturally be expected to cascade down the economy.

This, coming as it does at a time some banks are facing the liquidity challenges, should also be viewed as a vote of confidence in Zimbabwe’s banking sector and the rest of the economy.

Zimbabwe has been facing challenges in terms of capturing foreign investors but such deals as the Atlas Mara one shows there is still hope and that out there, investors see so much scope in this economy.

Indeed huge resources and a lot of energy have been expended by the West to tarnish Zimbabwe’s image by painting a picture of chaos but there always comes a time when the truth will out and the whole world begins to see who has been fooling who.

It’s not easy to attract investors of the Atlas Mara magnitude but when that happens, it tells a story that this country may have its challenges but there is something we are doing right.

Serious investors do a thorough due diligence and when you finally see them put pen to paper you will know they are really convinced of a high return on investment. This move then tells the world that indeed Zimbabwe is a place to be.

“Atlas Mara’s vision and strategy is to build a leading pan African banking platform by partnering strong African Banks and African entrepreneurs,” reads part of the statement issues on the deal.

This statement alone reflects the confidence the group has about the Zimbabwean market. We anticipate a multiplier effect from this deal that will see increased capital flow into the economy.

Atlas Mara co-founder Mr Bob Diamond is a previous Barclays plc chief executive with a wealth of experience in capital markets.
His company has also pledged to invest in corporate and social responsibility projects through the Bob Diamond Family Foundation and the Mara Foundation.

It is against this backdrop that we have every reason to celebrate the deal and make the most of it.
The firm said it would also invest at least US$500 million into the economy to help alleviate the liquidity challenge that is suffocating the economy.

Furthermore, Atlas Mara says it is comfortable with the country’s indigenisation policy and will soon present a compliance plan.
We expect more such deals to come Zimbabwe’s way over the next few months. The Zimbabwe Agenda for Sustainable Socio-Economic Transformation clearly enunciates the need for foreign direct investment to prop liquidity, create jobs and generate wealth, among other benefits.

Zimbabwe has over the years attracted a small fraction of investors into Africa but things are looking up in this regard.
The ABC deal also comes hard on the heels of a facility by Afreximbank to ease the liquidity crunch.

The bank launched a facility to raise funds last month.
The Afreximbank Trade Debt-backed securities will be provided to banks as debt securities that could be used as collateral for interbank funds placement. This will promote interbank dealings.

“Our objective is to use this facility to enable trade finance banks in Zimbabwe to access much-needed liquidity from cash-surplus banks in the country, thereby increasing their capacity to deepen their trade finance activities,” said Afreximbank president Mr Jean-Louis Ekra.
These deals will go some way in boosting liquidity.

Of course the amounts we are talking about seem to be a drop in the ocean given the billions of dollars that the economy needs to stave off current challenges.

However, a consistent of capital into the economy will do the trick no matter the amounts.
We expect more bi-lateral and multilateral lenders to inject fresh capital into the economy, something that will obviously require that we become more aggressive in our search of funds.

Not much has come Zimbabwe’s way in the last few years but we need to go on the offensive and ensure we get funds to oil the economy.
This will obviously be complemented by home-grown initiatives such as increasing productivity in agriculture, mining and other sectors of the economy.

More funds will be earned if Zimbabwe steps up production for the export markets, particularly through value addition.
Furthermore, efforts should be made to attract funds circulating in the informal market so that they can be accounted for and be directed towards the productive sectors of the economy as well.

Such seemingly small but effective strategies to harness what is already available could make a world of difference.
The banking sector itself should continue to work on strategies to attract deposits so they can lend for production. Reports are that the informal market is “awash” with money that could also aid the formal economy.

Confidence in the banking sector is still quite low due to a myriad of reasons that include fears of possible bank failures, high bank charges but we are sure banks have a way of enticing the funds planted in the garden or between mattresses.

The sad story of significant amounts going to other countries through imports of onions, tomatoes, sweets, milk and other products that are produced locally needs to be taken care of. These are perforations through which the economy is losing billions of dollars that could otherwise help finance key projects.

The term liquidity was alien to the average person until recently when the economy began to face cash challenges. It is now up close and personal. It’s affecting all and sundry.

This scenario should not prevail for long hence the need for a meeting of minds to resolve it.
Most businesses, households, institutions and even Government itself is experiencing the effects of an illiquid market with far-reaching consequences that are not sustainable.

The next few months look promising and we hope for greater fiscal and monetary policy engagements with local and external stakeholders to bring more funds into the economy.

Deliberate initiatives to generate more funds while conserving what is already there should augur well for an economy that is so full of promise to the extent that even the Bob Diamonds of this world cannot ignore it.

In God I Trust!

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