Imara sees foreign investors returning to Zimbabwe

LIVINGSTONE MARUFU

Imara Group expects foreign investors to return to Zimbabwe’s capital markets after years of sustained selling, as economic reforms, renewed international engagement and Old Mutual’s return to trading improve market sentiment.

Foreign investors have been net sellers of Zimbabwean equities since June 2020, when Old Mutual was suspended from trading on the Zimbabwe Stock Exchange (ZSE).

But the Government’s efforts to re-engage with international creditors, progress under an International Monetary Fund (IMF) programme and the reopening of investment channels are beginning to improve prospects for a market long shunned by international capital.

In its fourth-quarter investment report, Imara said the authorities’ commitment to economic reforms and debt restructuring, coupled with renewed interest from overseas investors, had strengthened the case for a potential return of foreign portfolio flows.

“Indeed, if anything, the economic authorities are keen to re-engage with the international community and succeed with their debt restructuring programme, hence their willingness to stick with the IMF’s Staff-Monitored Programme (SMP) targets,” the group said.

“Further boosting our optimism has been the return of foreign investor visits to Zimbabwe over the past weeks, especially those from the USA.”

Imara described the renewed visits as significant after years in which international investors largely stayed away from the domestic market.

“Having been net sellers since June 2020, we hope to see foreigners buying back into the market given the positive changes that have taken place here in recent years,” it said.

A key development has been the return of Old Mutual to the market through its listing on the Victoria Falls Stock Exchange (VFEX) in August 2026, after its shares were suspended on the ZSE for six years.

The move has restored trading in shares that investors had been unable to sell and removed a longstanding obstacle in discussions with prospective foreign investors.

“This is very good news not just for foreign investors whose shares had been suspended, but also for domestic investors, and in particular pension funds, whose liquidity had been compromised for so many years,” Imara said.

The group’s sister company, Imara Edwards Securities, is also planning a virtual investment conference in the coming months to connect international investors with Zimbabwean companies, particularly those unable to visit the country in person this year.

Old Mutual’s return carries significance beyond the resumption of trading in its shares. It also provides a test of whether Zimbabwe can establish a more predictable investment environment, particularly for foreign investors concerned about the movement of capital across borders.

Imara said the VFEX, which operates within the Victoria Falls International Financial Services Centre (VFIFSC), offered a potentially important channel for attracting international investment because of its framework for moving foreign currency into and out of the country.

“One key facet of the centre is the ability to seamlessly move foreign currency into and out of the country without inordinate approval processes requiring exchange control,” the group said.

The challenge, however, will be translating the framework into a consistent record of capital repatriation.

Imara said the VFIFSC could become a critical avenue for attracting foreign investors, but its success would depend on whether the promised arrangements worked reliably in practice.

The ability to repatriate investment proceeds has been one of the principal concerns discouraging foreign portfolio investors from committing capital to Zimbabwe.

The centre, Imara said, would succeed only if it adhered to predictable rules, ensuring that investors could transfer funds when required without unexpected delays or restrictions.

Beyond portfolio investment, the group pointed to renewed engagement by international development finance institutions as another indication of improving sentiment towards Zimbabwe.

The International Finance Corporation (IFC), the private-sector arm of the World Bank Group, has intensified its engagement with the country after an extended period of limited activity and is assessing the possibility of re-establishing a local presence.

Historically, the IFC has supported private-sector development, economic reform and sustainable investment in emerging markets. A renewed presence could help broaden access to capital and technical expertise for Zimbabwean businesses.

Imara cautioned, however, that the domestic banking sector remained too small to meet the economy’s financing requirements fully, particularly the demand for affordable, long-term capital needed to support economic recovery and investment.

Local banks have consequently been seeking offshore credit lines from institutions such as the European Investment Bank, the Trade and Development Bank and Afreximbank.

More recently, two Zimbabwean financial institutions concluded a US$50 million financing arrangement with British International Investment to support lending to the agricultural sector and exporters.

Imara said the timely servicing and repayment of such facilities would be critical to sustaining international lenders’ confidence and securing further funding.

The broader question is whether renewed international engagement can translate into a lasting improvement in Zimbabwe’s access to global capital markets.

In February 2026, the Government and the IMF agreed on a 10-month SMP intended to support macroeconomic stability, economic reforms and progress towards resolving the country’s longstanding external debt problems.

Following two IMF reviews, the programme remained on track, according to Imara.

The authorities are seeking to use progress under the programme to advance debt restructuring and secure a bridging loan in early 2027 to clear arrears owed to the World Bank and African Development Bank. Resolving those arrears would pave the way for the resumption of concessional financing from the two institutions.

The outcome remains uncertain, but Imara believes sustained adherence to the IMF programme would strengthen Zimbabwe’s case for renewed international support.

The anticipated return of foreign investors comes against a backdrop of equity valuations that Imara has previously described as exceptionally attractive.

In July 2025, the investment group argued that the ZSE and VFEX were trading at some of their cheapest levels since the 1990s, when the domestic market first opened to international investors.

The disconnect between corporate fundamentals and share prices was particularly striking.

Despite strong economic growth, robust consumer demand, rising capital investment and improved commodity prices, Zimbabwe’s equity markets were failing to reflect the underlying performance of many listed businesses.

Foreign investors had been persistent net sellers since mid-2020, while domestic investors were also showing limited appetite for equities, particularly those listed on the ZSE and denominated in Zimbabwe Gold (ZiG).

This was despite the fact that some of the underlying businesses generated substantial US dollar revenues and paid dividends in the American currency.

Imara said pension funds had been actively selling ZiG-denominated assets, including equities that it considered undervalued.

Statistics from the Insurance and Pensions Commission (IPEC) in early 2025 showed that listed equities accounted for less than 25% of pension fund portfolios, with greater allocations to property and alternative investments.

Those asset classes, however, tend to be less liquid than listed shares. When pension funds need cash to meet their obligations, equities can become the easiest assets to sell, even when market prices are depressed.

The resulting selling pressure pushed valuations lower, reinforcing investor pessimism and further weakening demand.

Imara’s assessment in 2025 highlighted the extent of the disconnect.

Delta Corporation was valued at about US$500m, using an exchange rate of ZWG33 to the US dollar. The brewer was trading at a forward price-to-earnings ratio of less than five times its March 2026 earnings and offered a dividend yield of about eight per cent.

Econet Wireless Zimbabwe had a market value of approximately US$300m, a price-to-earnings ratio of just 2.5 times and a dividend yield of about 20%.

On the VFEX, Innscor Africa was valued at approximately US$270m and traded at less than five times its June 2026 earnings.

With hindsight, the group’s earnings and dividend estimates proved conservative, despite having been more optimistic than prevailing market expectations.

The combination of a renewed IMF programme, progress towards debt resolution, greater international engagement and the restoration of trading in Old Mutual shares could help remove some of the barriers that have kept foreign investors away.

But a sustained recovery will depend on more than attractive valuations and improved sentiment. Investors will be looking for credible economic reforms, dependable market liquidity, predictable rules and, above all, the ability to repatriate their capital.

Ends////