2. Introduction
Zimbabwe is a natural resource rich country in Southern Africa. Current political and
regulatory challenges have created vast unconsummated wealth creating opportunities.
Economic Trends
The 2008 global economic crises, an eye popping inflation rate of 25 billion percent in
November 2008 and a land reform program created economic instability. By 2010, the
Zimbabwean economy had shrink by half [1].
In 2009 a basket of foreign currencies (Renminbi, Rupee, Rand, Pula, Pound, Euro and
Dollar) became legal tender with the US dollar representing 90% of economic transactions by
2015. The Reserve Bank of Zimbabwe’s discount rate is at 7.5% (2015). Interest rates on short
term loans by commercial banks range from 20% to 40% (2015). The long term loan market has
dried out due to high default rates. The current inflation rate is 3.5 % (USD) (2015) [2] [3] [5].
Population 14m (2014), GDP $15b (2014) GDP Growth 4-6 % (2015 to 2010) and Per
Capita Income $2100 (2014). Literacy rate is one of the highest in Africa at 90%.
Unemployment rate, 90% (2015).
Key Economic Sectors
Mining & Manufacturing 20%
Agriculture 19%
Information Communication Technology (ICT) 14 %
Energy 7%
Other 40%
Venture Capital Regulations
Minimum investments $500000, lock in period, 10 years.
Company tax in designated investment zones 5 years < 0%
3. Company tax, 25%
Withholding tax on dividends, 20%
Allowed shareholding for international investors 49%
Withholding tax of 25% on dividends, 20% [2]
Notable Venture Capital Firms in Zimbabwe
Matamba Anonaka Technology. Holdings Takura. Capital. GroZim and
Venture Capital Company of Zimbabwe
Current Venture Financing Environment
Venture financing sources are mainly wealthy individuals, pension funds, insurance companies
and sovereign wealth funds from the Middle East and the Far East. Participation by Venture
Capital firms in Zimbabwe is limited, less than 1% of GDP. Average Industry Targets: [4] [6]
IRR 25%
Hurdle Rate 11%
Management Fees 2%
Carried Interest 20%
Executive Management Contribution 1% [7] [8]
Venture Financing Recommendations
The country has had an unstable regulatory political environment for the past 15 years. This
instability is projected to come to an end in the next five years, creating conditions suitable for
investors with a long term perspective. Asset prices, financial and physical, are currently
undervalued and has potential for leveraged buyout companies. New ideas and technologies in
the ICT sector, mining and agriculture present low hanging fruits for venture capital firms in
Zimbabwe.
4. References
1. CIA Factbook - Zimbabwe
https://www.cia.gov/library/publications/the-world-factbook/geos/zi.html
2. Corporate Tax
http://www.zimra.co.zw/index.php?option=com_content&view=article&id=1611&Itemid=70
3. Zimbabwe Investment Authority
http://www.investzim.com/
4. Investment Returns in Africa
Economist Intelligence Unit, 2012 online survey of 158 institutional investors
5. Interest Rates
http://www.newsdzezimbabwe.co.uk/2015/08/banks-to-cut-interest-rates.html
6. Enterprise Finance in Zimbabwe
http://web.stanford.edu/~fafchamp/zimba.pdf
7. Private Equity in Zimbabwe
https://www.icaz.org.zw/ArchiveDocs/equity.pdf
8. FDI
http://allafrica.com/stories/201512040180.html
9. International VC’s
http://www.itnewsafrica.com/2012/10/top-5-venture-capital-firms-targeting-africa/
![Introduction
Zimbabwe is a natural resource rich country in Southern Africa. Current political and
regulatory challenges have created vast unconsummated wealth creating opportunities.
Economic Trends
The 2008 global economic crises, an eye popping inflation rate of 25 billion percent in
November 2008 and a land reform program created economic instability. By 2010, the
Zimbabwean economy had shrink by half [1].
In 2009 a basket of foreign currencies (Renminbi, Rupee, Rand, Pula, Pound, Euro and
Dollar) became legal tender with the US dollar representing 90% of economic transactions by
2015. The Reserve Bank of Zimbabwe’s discount rate is at 7.5% (2015). Interest rates on short
term loans by commercial banks range from 20% to 40% (2015). The long term loan market has
dried out due to high default rates. The current inflation rate is 3.5 % (USD) (2015) [2] [3] [5].
Population 14m (2014), GDP $15b (2014) GDP Growth 4-6 % (2015 to 2010) and Per
Capita Income $2100 (2014). Literacy rate is one of the highest in Africa at 90%.
Unemployment rate, 90% (2015).
Key Economic Sectors
Mining & Manufacturing 20%
Agriculture 19%
Information Communication Technology (ICT) 14 %
Energy 7%
Other 40%
Venture Capital Regulations
Minimum investments $500000, lock in period, 10 years.
Company tax in designated investment zones 5 years < 0%](data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7)