Economy

Not much to be happy about a poorly-run country

BATANAI MATSIKA

In a conversation about immigration sometime back in 2018, President Donald Trump sparked “world-wide rage” when he referred to
Haiti, El Salvador, and an assortment of African nations as “sh@#hole countries” during a closed-door meeting with congressional leaders.


Trump also reportedly complained that Nigerian immigrants would never “go back to their huts” and that Haitians had AIDS in what has been regarded as racially discriminatory against nonwhite and non-European
immigrants.


In another conversation about Africa, President Donald Trump cited that is was “very difficult for ordinary people to live in certain African
countries”. While we do not support the idea that certain countries are sh@#hole, we are inclined to agree with Trump that it is very difficult to live in certain countries. A report that vividly explains this point is
the World Happiness Report.


The World Happiness Report ranks countries around the world by their
subjective well-being and looks into how the social, urban
and natural environments combine to affect happiness.


The 2020 World Happiness Report uses six key variables to come up with national annual average scores over the period from 2005 to 2019.


These variables are GDP per capita, social support, healthy life expectancy, freedom, generosity, and absence of corruption. Unsurprisingly,
poor and more violent countries in Sub-Saharan Africa (SSA)
are the most miserable – there is little to celebrate in regions where GDP per capita is low and corruption in rampant.


Zimbabwe is ranked number 151 out of 153 with a score of 3.299. Finland is number 1 and has a score of 7.809.


Interestingly – in the same immigration conversationPresident Donald Trump advocated that it made sense to have more people coming
to America from places like Norway. Now, the five Nordic countries – Finland, Denmark, Norway, Sweden and Iceland – have all been in the top ten of the Happiness Index.

Nordic countries have occupied the top three spots in 2017, 2018 and 2019. Explanations include factors related to the quality of institutions
(reliable and extensive welfare benefits), low corruption and a well-functioning democracy.


Furthermore, Nordic citizens experience a high sense of autonomy and freedom, as well as high levels of social trust towards each other. All these
factors play an important role in determining life satisfaction.


As Investment Bankers, one area that we have observed as affecting happiness or life satisfaction has to do with incomes.

Not necessarily the capability to earn or generate an income but also the ability to preserve its value. In a country where inflation hovers around
1,000%, and the exchange rate deteriorates every day, what
do locals have to be happy about?

We have consistently insisted investors to park ZWL balances in well managed, cash generative and export-oriented
businesses on the Zimbabwe Stock Exchanges (ZSE). More recently, the bulls have been raging on the ZSE following news on the ZWL$18bn
stimulus package and rumours of money printing.


However, one should always be concerned when the stock of
Covid-19 hit tourism groups (with empty hotel rooms) like African Sun start booking 20% gains on a daily basis.


Our advice is simple; Stick to Fundamentals! Buy into Ariston, Padenga Holdings, Simbisa Brands, Innscor Africa, OK Zimbabwe, Econet
Wireless, Cassava, SeedCo and SeedCo International!


Batanai Matsika is the Head of Research – Morgan & Co and can be contacted on +263 78 358 4745 or email: batanai@morganzim.com

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