As we've explored potential locations for the next great new global city, a million-to-one longshot is rising to the surface as a candidate for value-based future investment. Having gone through one of the most turbulent decades in the history of the world politically over the last ten years, does a case exist that Zimbabwe, also one of the world’s more beautiful countries, could be the world’s next great urban frontier? News stories have documented the country's quest for new investment. Here's a case for why it could make sense.
Zimbabwe’s Last Ten Years
It’s not hyperbole to call Zimbabwe’s last decade a disaster. For a decade and a half the African nation has endured among the worst nadirs of economic collapse and political turmoil the world has ever seen. Its story hardly needs telling, but for the fact is a tale so miserable it’s amazing it hasn’t made more headlines.
In short, in the 1980s the new country of Zimbabwe, freshly liberated from British rule, enjoyed a growing economy paced by a robust farming industry. In the 1990s, however, land reforms designed to evict white landholders from the country inadvertently crushed the country's agricultural sector, which pulled with it the country's banking sector as well as the rest of the country’s economy, pushing unemployment as high as 80 percent. With nearly the entire country out of work and the stability of landholding compromised, the country’s fundamental institutions failed, and inflation became exponential, by 2009 approaching nearly infinite levels. At its worst, inflation within the country topped 90 sextillion percent per month, which forced the country to stop printing money.
With inflation so high, banks became unable to keep up with the zeroes, and it became impossible for residents to access any capital. With no currency, the country was hammered by black market currencies. The country tried everything, even replacing its own currency with the US dollar in an attempt to stabilize inflation, which it temporarily did. In a desperate bid to draw a bidding war, Zimbabwe ditched that plan when the Chinese promised to invest. That fell through, too. In the last few years, the country’s native currency was restored, and inflation is again on the rise.
With no energy resources of its own, Zimbabwe has gone black for much of the last decade. Residents fled to sanctuary cities in surrounding countries, agriculture disappeared, land security became nonexistent, and crime skyrocketed. Poaching became a common pastime, and the country’s wildlife was decimated to the extent of 90 percent. The airlines left the country, making coming or going nearly impossible, and the country’s previously passable infrastructure and education systems started to crumble. With little money of its own, the government encouraged mass corruption, leading to routine road barricades at which government officials would swindle its own residents of any money they had, all of it in foreign currencies. While the rest of the world crawled out of recession, Zimbabwe ran itself through a metaphorical torture chamber.
The Flattening Out: Zimbabwe Today
While inflation is still rampant, the Zimbabwe of today has stabilized somewhat. The 2017 military coup and subsequent resignation of former President Robert Mugabe opened the door to reforms, which has led to new leadership and a push for new investment. It has given Zimbabwe a glimmer of hope, though for the most part it is still off in the distance.
Its current hope is not a story of triumphant reform. The reason Zimbabwe has potential today is that anything is better than where it has been. In Zimbabwe today there remains no agricultural sector. Half the population needs food aid, the economy is contracting, and the few from Zimbabwe who seek higher education in the hopes of being innovators have been doing so out of the country. Still, unemployment has plummeted from 80 percent to around 4 percent. GDP has risen, from $365 per person in 2008 to nearly $2,200 in 2018, still desperately low, but six times higher than where it was a decade ago. Inflation, creeping higher again, is nearly 100 percent per month, but it is not infinite. It does not allow for residents to save any money, but it is calculable by bank computers. To cap it off, in 2019 Zimbabwe was hit by one of the worst cyclones to hit Africa ever.
Zimbabwe’s current status is still among the most precarious in the world, but it’s better than where it was. Zimbabwe offers opportunity because value creation demands a low starting point. Nation building, in particular, demands a starting point that predates the existing of a thriving nation, and Zimbabwe, for all its great people and natural beauty, today is not yet thriving.
Zimbabwe Tomorrow: A "New World" for Future Investment
What do you get when you combine extreme inflation, rising GDP, and global alienation? Zimbabwe is a country desperate for an investment, with a population that needs to work, and a fair amount of potential. Zimbabwe excels in an area that we'll call "blank slate" potential for "new world" investment, should one decide to build from the infrastructure on up. It enjoys the kinds of attributes that make it a potential "diamond in the rough", though its' a coarse "rough" of which only massive and resource-intensive investment may one day ultimately find a profit. But if it can, the country would benefit from it.
Governance: New governance in Zimbabwe is hungry for any kind of investment. Newly wary of its last decade, Zimbabwe is open for business, cognizant of corruption, and out for fresh ideas. Good deals appear very much up for the making.
Arable land: Thanks to the abysmal failures of its land reform efforts in the 1990s, Zimbabwe is rich with arable land and a country that desperately needs food. It once had a thriving farming economy, suggesting it could once again, if adequately secured.
Minerals: Zimbabwe, like much of Africa, is a veritable gold mine, home to diamonds, gold, coal, iron ore, chromium ore, vanadium, asbestos, nickel, copper, lithium, tin, and platinum group metals, all likely to rise in value over the next few decades.
Oil: Zimbabwe has long suffered from the lack of its own energy resources, but the 2019 announcement that deep field oil deposits may exist near the coast of the country suggest Zimbabwe may be a next great frontier for energy, not just minerals. Solar, too, has not yet been explored there. Outside of these, Zimbabwe has sought aid from the UAE for pipeline access to the country. Its proximity to the Arabian Peninsula should give it some security regardless of its deep field extraction viability in the near-term. That the fields are deep, too, may give the country security as the value of these fields is long-term, not short-term.
Labor: With its national individual savings nearly completely depleted, Zimbabwe offers a pool of laborers who are all starting from scratch. With a decent national education system and the potential to grow a pool of innovators, Zimbabwe has the potential to grow a strong local labor pool. A new economy would be a tremendous infusion.
With these five attributes, Zimbabwe may not yet be the best potential investing spot for many kinds of new businesses. But there's a lot to be gained for certain kinds of big investments, if made from the infrastructure-up and made over the long-term. Investors could gain mightily from the country's current low prices and future resource potential. And the country has everything to gain from any kind of new economy. Investors, take note.