Dangote rekindles investor interest

By Shame Makoshori

NIGERIAN billionaire, Aliko Dangote, this week announced bold moves to crack into the Zimbabwean market despite concern from other investors unhappy with the country’s restrictive laws, which limit them to a maximum of 49 percent shareholding in local firms.

Authorities have, however, been battling to stop an economic meltdown that has sparked capital flight and carnage on the job market.

They have now indicated that a raft of laws that make Zimbabwe less attractive to investors would be reviewed to make them investor-friendly.

As firm closures mount, authorities are now eager to find a solution to a crisis that was precipitated largely by a liquidity crunch in a hard currency economy dominated by imports.

Analysts see the sudden interest by businesspeople like Dangote as a positive signal.
That a dealmaker of Dangote’s stature would show interest in Zimbabwe was almost unimaginable until recently.

Investments into the country have mostly come from India, South Africa and China, which has dominated the majority of government-sanctioned transactions.

Russia has also registered a presence in the mining sector, particularly with its multi-million dollar platinum project in Darwendale.

Vice President Emmerson Mnangagwa has said Zimbabwe is now ready to sit down with investors even beyond the much favoured east and negotiate win-win deals that can help rebuild the country’s shattered economy.

In a surprise visit, in which he met several government officials, Dangote said he did not waste time visiting destinations where he would not plough investment.

“We are looking at a couple of things, power generation, coal mining and also putting of the cement plant,” he told reporters in Harare on Monday.

“We are sending our team next week and hopefully if things go well, we would be ready to put the biggest cement plant, which is a million and half tonnes, so we will look into this. We have already decided to invest into Zimbabwe. That is why we are here. Any country were you see us visiting it means, yes, we have decided to invest,” said the Nigeria businessman, whose net worth is estimated at about US$17,2 billion by Forbes magazine.

Speaking about Dangote’s interest, economist, Kingstone Khanyile, said: “It is a sign of improving confidence on Zimbabwe. It shows there is a policy shift and there is an impetus towards attracting foreign direct investment (FDI).”

Dangote joins several other investors who have trooped into the country to explore investment opportunities. Many have not yet committed to real investment in the country, but still others have snapped assets in the banking, mining, telecommunications, petroleum, hospitality and other industries.

For instance, in September last year, multinational firms assumed control of the Zimbabwe Stock Exchange-listed packaging giant, Hunyani Holdings Limited, following a landmark transaction that underscored government’s climb-down on empowerment policies.

The deal, which garnered an emphatic nod from Hunyani shareholders, saw Nampak consolidating a cluster of its interests in the country’s packaging sector into a single, well-capitalised and efficient unit.

Hunyani was rebranded Nampak Zimbabwe, and the South Africans pledged to pour US$2,6 million in cash to drive expansion programmes, and raise working capital.

Nampak, South Africa’s largest packaging business with a footprint in several African markets, emerged majority shareholder in the rebranded Nampak Zimbabwe Limited with 51,4 percent shareholding.

Beer brewer, SABMiller, majority shareholder in Delta Beverages Zimbabwe, indirectly controls 22,6 percent of Nampak Zimbabwe through the Zimbabwean blue chip.

Old Mutual controls 3,9 percent shareholding to complete the list of foreign firms whose combined shareholding is now almost 80 percent.

To many, the big deals were being cut out by risk-averse investors. But some analysts say it is time foreign investors, currently sitting on the fence, reconsidered their positions on Zimbabwe. A few foreign oil firms have taken over the country’s petroleum industry.

The Dutch energy outfit, Trafigura acquired controlling stocks in Redan, the petroleum firm employing about 550 workers across 62 service stations, and Sakunda.

Trafigura entered the Zimbabwean market at the end of 2013 through Puma and snapped 60 percent shareholding in Redan.

In July 2013, Kansai Paint, the Japanese outfit, swooped on 63,25 percent shareholding in Astra Industries Limited, the Zimbabwean paint producer, in a US$5,5 million transaction that would bankroll expansion plans.

“The acquisition will allow (the company) to focus further on its expansion plans and its aim to continue leading the industry,” Kansai Plascon Africa chief executive officer, Nauman Malik, said.

Société Industrielle Lesaffre of France has acquired a 60 percent stake in Anchor Yeast (Private) Limited in a deal worth US$11,5 million.

Prosper Chitambara, chief economist at the Labour and Economic Development Institute of Zimbabwe, said there were several factors driving interest on Zimbabwe.

“It is natural for investors to scout for opportunities,” Chitambara said.

“There are opportunities in Zimbabwe under the adversities. This is why even the richest man in Africa is coming here. We see a combination of scouting and taking positions. But they can be buying assets at a discount. The climb down on indigenisation is also giving investors some incentives,” he said.

In the past few weeks and months, and amid resistance from a pressure group, media limelight shifted to the milling firm, Blue Ribbon Industries. There, the Tanzanian domiciled Bakhresa Group has been gunning for full control.

Cabinet has approved the transaction, which will see the Tanzanians pouring US$40 million into the Zimbabwean firm. There has also been a strong shift towards investment in the mining industry. About US$5 billion is required to rebuild the sector.

When Rio Tinto Plc divested out of Murowa Diamonds a few months ago, Indians investors took its 22 percent shareholding.

In September last year, the Russians made a strategic move into Zimbabwe’s platinum mining sector in the Great Dyke, in the latest signal of an intensifying scramble for Zimbabwe’s minerals.

Their deals spanned from mining, mining equipment supplies to delivery of military helicopter gunships, with the flagship being the US$3 billion Darwendale platinum project. Financial Gazette