IT is fascinating that much of what humans do in life is searching for something. Life requires one to find a good education, a job or income generating activity and most importantly a life-partner.
Those who are lucky enough also find happiness. This, in our view could be the reason behind the success of Pokémon Go, a 2016 augmented reality (AR) mobile game developed and published by Niantic.
It is estimated that in 2019 alone, Pokémon Go earned US$1,4 billion while Pokémon Go live events earned US$249 million in tourism revenue.
Pokémon Go is a game that uses your phone’s GPS to detect where and when you are in the game and make Pokémon (virtual creatures) “appear” around you (on your phone screen) so you can go and catch them.
As you move around, different and more types of Pokémon will appear depending on where you are and what time it is. You may have heard stories of people hunting down Pokémon on their office desks, in hospital rooms, and even in bathrooms.
One teenage girl even found a dead body while looking for Pokémon. In the same way as gamers search for Pokémon, the focus for investors all over the world is alpha returns (excess return on an investment relative to the return on a benchmark index).
One important trend amongst institutional investors in Zimbabwe has been a move to tap into tourism and hospitality assets in Victoria Falls either through direct investments or Real Estate Investment Trusts (REITs).
Victoria Falls is home to “Mosi-oa-Tunya/ Thundering Smoke”, a waterfall on the Zambezi River in Southern Africa, which provides habitat for several unique species of plants and animals. It is located
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on the border between Zambia and Zimbabwe and is one of the world's largest waterfalls, with a width of 1,708 m (5,604 ft). It was christened Victoria Falls in honour of the British Queen Victoria and is counted among the Seven Natural wonders of the World.
In this article, we detail some of the reasons why this trend is playing out amongst institutional investors in Zimbabwe.
A strong recovery of the tourism sector post-covid-19 The tourism industry in Zimbabwe is experiencing a resurgence and is expected to grow by 6,9% in 2024, driven by growing interest from international tourists, increased travel and trade in the region.
The ongoing global tourism recovery and improved accessibility to Zimbabwe has been made possible by improved infrastructure and the entry of new airlines into the country.
During the period January to September 2023, tourist arrivals increased by 52%, reaching 1,087,445 from 714,621 during the same period in 2022.
Most source markets saw an increase in arrivals, notably the Middle East (153%) and Africa (76%). As a result, tourism receipts increased by 18% to US$724 million, up from US$615 million realised in the same period in 2022. There is, therefore, a strategic logic for investors to seek exposure in tourism by taking positions in Victoria Falls.
Significant improvements in air infrastructure Victoria Falls is a major tourist destination drawing tourists from all over the world to view the majestic Victoria Falls, Zambezi River and scenic game parks in the vicinity, whilst experiencing the rich Zimbabwean culture in a warm and friendly environment.
The completion of the new Victoria Falls International Airport in compliance with IATA requirements is enabling direct flights from major European cities to the Victoria Falls, thereby, creating a tourist hub. This is also complemented by short haul flights servicing tourist destinations within the region.
Development of an offshore financial services centre Zimbabwe has introduced the concept of Special Economic Zones of which Victoria Falls has been designated as a Special Economic Zone (SEZ).
This basically refers to a geographically specified and physically secured area administered under a distinct authority, offering certain incentives including more liberal and simplified economic regulations for business to physically locate and operate within it.
Special Economic Zones have been designed to address some of the public and private sector constraints in the country such as high unemployment, low exports, subdued competition, de-industrialisation, availability of reliable quality infrastructural development and technological transfer.
The Victoria Falls Stock Exchange (VFEX) has been established to kick start the Offshore Financial Services Centre earmarked for the special economic zone in Victoria Falls. The basic concept is that the rules in place in offshore financial services centres are different from those
that are in place in mainland zones.
These stock exchanges operate very independently using a different set of rules of trading. Securities listed on the Victoria Falls Stock Exchange are tradable and settled solely in United States Dollars or a convertible currency.
Positive impact from sports tourism We note that major sporting events have become powerful tourism attractions in themselves, contributing significantly to the image of the country and economy.
In this regard, investment in sport facilities and the hosting of international or regional events is a catalyst for tourism development. Zimbabwe, South Africa and Namibia will co-host the 2027 International Cricket Council (ICC) World Cup.
As a result, Zimbabwe has commenced the construction of a state-of-the-art multi-purpose sports stadium in Victoria Falls. The 10 000-seat stadium will accommodate various sports, including football, rugby, tennis, hockey, and squash.
The stadium will be completed by August 2025 to allow for the necessary preparations for the World Cup. The new stadium is anticipated to significantly boost Zimbabwe’s sports and tourism sectors, providing a world-class venue for both local and international events.
Overall, the investment case for tourism and hospitality assets in Victoria Falls remains solid. We also contend that upside can also be realised through promoting domestic tourism.
One area that should be prioritised is the rehabilitation of the Bulawayo – Vic Falls road, which is a key tourism link. The road leads to the country’s prime tourism destination and connects Botswana, Zambia, Namibia and South Africa through Bulawayo.
That said, we recommend money managers in Zimbabwe to add Victoria Falls tourism and hospitality assets to core portfolios given the scope for massive upside in the outlook period.
Matsika is a corporate finance specialist with SwitzView Wealth Management. He can be reached on +263 78 358 4745 or [email protected].
