Zimbabwe seeks high-net-worth partners for startup fund

Deputy Minister of Finance, Economic Development and Investment Promotion David Mnangagwa has announced that National Treasury is seeking strategic alliances with high net worth individuals to launch the National Venture Capital Fund (NVCF), established in 2021 to support startups and small and medium-sized enterprises (SMEs). Despite its establishment, the NVCF has remained dormant due to lack of government resources.

Venture capital funds typically provide capital to early-stage startups with high potential in exchange for equity. Responding to entrepreneurs’ concerns at the 7th SADC Industrialisation Week in Harare, Mnangagwa stressed the need for startups to develop their ideas and businesses. He attributed the NVCF’s inaction to the absence of a CEO with private sector experience, but noted that the issue was being addressed.

The Reserve Bank of Zimbabwe’s 2022 MSME Survey estimated the informal sector’s annual turnover at $14.2 billion, against $8.6 billion of GDP and $2.5 billion in unbanked cash. Given the government’s current inability to fully fund venture capital, Mnangagwa stressed the importance of forming alliances with venture capitalists and asset managers.

The National Venture Capital Company is exempt from the Public Procurement and Disposal of Public Assets Act, allowing it to operate competitively and collaborate with entrepreneurial drivers. The government is also committed to supporting SME participation in capital markets and creating a financial architecture that serves the government, the people and the business community.

Mnangagwa noted the information gap regarding opportunities for small businesses and individuals in capital markets, including ETFs, C-Trade and real estate investment funds. He called on the Securities Exchange Commission of Zimbabwe and the Zimbabwe Stock Exchange to educate citizens about these opportunities, highlighting the C-Trade platform that allows young people to participate in the stock market through their phones.

McLean Sibanda, Managing Director of Bigen Global, stressed the need for policies that promote innovation and development of SMEs. He distinguished between SMEs and startups, emphasizing that startups leverage technology and innovative practices in conditions of extreme uncertainty. Sibanda called for the creation of a regulatory environment that supports startups and SMEs, suggesting financing instruments such as gap financing, R&D incentives, and the development of supply companies to increase market access and R&D investment.

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