Investors Reconsider Zimbabwe's Pariah Status

Online, March 24, 2011 (Newswire.com) - Zimbabwe has long been cast as a pariah state, and debates on indigenisation and elections rage on. However with 9% economic growth forecast for 2011 its been described by Euromoney as one of the last great investment frontiers.

This week, Brands Trading, a Harare based manufacturer and supplier of t-shirts, traditional dress and small luggage to the NGO (non-governmental organisations) sector, raised the USD$6000 they needed to finance a customer order in just over a day, using online investment platform Schmooze Frontier Markets (also known as Schmooze FM). Frontier Markets refer to new emerging markets, countries that typically display high GDP growth rates but are not as developed as more established emerging markets such as China and Brazil.

David Chigodo of Brands Trading said, "Like many businesses in Zimbabwe, securing capital to fulfil our orders has been a major challenge. Using this platform we managed to raise the capital we need and can focus on growing our business."Schmooze FM has the ability to provide up to USD$2M available immediately to small and medium sized enterprises ("SMEs").
SME's know that if they are featured on Schmooze FM, they are guaranteed an immediate minimum level of funding. They can request typically between USD$5000 and USD$50 000 each to help with order financing, working capital and other capital needs.

From an investor's perspective, Schmooze FM reduces the risk of investing in frontier market countries with a perceived high risk profile, of which Zimbabwe is a prime example. Schmooze FM achieves this reduction in risk by working with local partners to conduct due diligence, groundwork and invest in featured companies, in effect 'putting its money where its mouth is.' Schmooze FM will tap remaining funding requirements from its database of investors worldwide.

Investors have full visibility and transparency in respect of all opportunities listed on Schmooze FM, giving them a distinct advantage over those who invest through funds. Investors in funds often have little understanding about the individual companies that comprise a fund. These investors are forced to rely on fund managers' judgement and often become involved in "fund of funds" and other similar, indirect investments that are never actually investigated by the fund managers.

Investments on Schmooze FM are structured so that investors receive a regular pre determined return on their investment. Schmooze FM Investment Director Lyndon Miles said, "As an investor you really don't want to fly blind when it comes to investing in frontier and emerging markets. It is essential to know what you're investing in and there's no better way to prove that we have confidence in an investment we feature on Schmooze FM than to put our own money into it."

The appeal of Schmooze FM also extends to investors in Zimbabwe's 3 million strong diaspora. Zimbabweans in South Africa, for example, were responsible for repatriating in excess of US$360M in 2008. US based Zimbabwean Olympic sprinter Brian Dzingai, currently training for the 2012 London Olympics in Florida said, "Schmooze FM has designed an effective platform and structure to invest and conduct business in Zimbabwe during this dynamic period, having a direct influence on the growth and economic development of the country."

The recent decision to invest $25M into securing a 29.5% holding of Masawara (a fund listed on the London Stock Exchange focused on Zimbabwean investments) by leading investment manager Neil Woodford of Invesco Perpetual is recognition of Zimbabwe as a realistic investment destination. This commitment demonstrates that Zimbabwe, like other emerging and frontier markets, may have its issues, but there are investment-worthy businesses with scope for rapid growth, especially with 9% GDP growth on the cards for 2011.