Arenel's $26mln investment signals optimism in a volatile market
FOOD and beverage manufacturer Arenel is forging ahead with ambitious expansion plans, a move that underscores the company’s confidence in Zimbabwe’s long-term economic prospects despite a turbulent business environment.
In an interview with The Financial Gazette, Arenel Compliance Officer Stephen Ncube painted a picture of a company strategically investing in growth.
“We have invested $26 million in state-of-the-art manufacturing plants, expanding our product lines in response to changing consumer tastes,” Ncube explained, adding that 600 people are currently employed by the company.
Arenel, which obtained a Special Economic Zone Investment Licence in December 2020, enjoys duty rebates on capital equipment and raw materials through the Zimbabwe Investment and Development Authority (ZIDA). Ncube credits ZIDA’s support as being critical for expansion.
Despite a challenging investment landscape, Ncube maintains a determinedly bullish outlook. “We are seeing opportunities in this country that others are not seeing,” he asserts, emphasizing Arenel’s commitment to supporting Zimbabwe’s goal of becoming an upper-middle-income economy by 2030.
However, Ncube also acknowledges areas where the investment climate requires improvement. Calls for greater policy consistency, the harmonization of conflicting legislation, and better fiscal and non-fiscal incentives underscore the private sector’s desire for an even more streamlined business landscape.
The Compliance Officer advocates for support focused on bolstering domestic industries, including safeguards to protect local companies and enabling them to scale up exports, boosting competitiveness internationally.
Interestingly, Arenel’s expansion strategy features a strong focus on sustainable business practices. The company boasts an Environmental, Social, and Governance (ESG) strategy designed to deliver positive environmental and social impact alongside shareholder returns.
“Businesses not taking ESG seriously are losing customers, employees, and financing. ESG is no longer a choice; it’s an imperative,” Stephen Ncube states.
Arenel’s story paints a complex picture of the Zimbabwean investment climate. It highlights the significant potential existing alongside ongoing challenges typical of emerging markets.
The company’s expansion and its focus on sustainability suggest that some investors may be viewing Zimbabwe through a more optimistic lens than the often-negative headlines suggest.
Meanwhile, the Zimbabwe Investment and Development Agency (ZIDA) is targeting a two-day turnaround for investor licensing, a significant reduction from the current 14 to 21 days, according to chief investment promotion officer, Silibaziso Chizwina.
This move comes in response to growing interest from foreign investors and the need to streamline what has been a lengthy and cumbersome administrative process.
ZIDA recently launched an electronic Do-It-Yourself (DIY) investment licensing system, aiming to expedite the licensing process. Since its inception in 2020, the agency has issued over 1 000 new licenses, indicating a surge in investor interest.
The agency has been operating an online system for processing license applications and handling investment inquiries since April 2023. This has led to an increase in licensed investors, with more projects licensed in 2023 compared to 2022.
Despite challenges such as a massive debt overhang and negative international perception, Zimbabwe has seen a rise in foreign direct investment over the past five years, particularly from China. In the fourth quarter, 76 percent of the projected investment value for all licenses was in the mining sector.
Harare, the economic hub, dominated in terms of regional distribution of investments, with a focus on the manufacturing and services sectors.
