Online Reporter
Nelson Gahadza
Senior Business Reporter
The Government plans to divest part of its stake in the National Venture Fund over the next two years, targeting about US$20 million in fresh capital as it moves to deepen private-sector participation in financing start-ups and small businesses.
Finance, Economic Development and Investment Promotion Minister Professor Mthuli Ncube said the planned divestment was aimed at bringing long-term private investors into the fund and reducing the State’s dominance in an investment vehicle designed to provide equity capital to emerging businesses.
Speaking at a media briefing following the secondary listing of Old Mutual Limited on the Victoria Falls Stock Exchange (VFEX), Professor Ncube said the Government expected to release shares in the venture fund to the public within the next 18 to 24 months.
“A good figure out of divestiture is about US$20 million.
Our idea here is that the National Venture Fund provides good returns for investors. We think we have a strong investor case, but we also have a very strong developmental case to support our SMEs and our start-ups, whether they are in tech or agri-processing,” he said.
The planned divestment comes as the Government seeks to broaden sources of capital available to businesses, particularly start-ups and small and medium-sized enterprises (SMEs), which often struggle to access conventional bank financing because of collateral requirements and limited operating histories.
Professor Ncube said the Government did not see itself retaining majority ownership of the fund, arguing that the private sector should ultimately take the leading role.
“Within the next 18 months to two years, we will be releasing shares to the public. And there is no reason why the Government should have majority shareholding, frankly. We would like the majority to be held by the private sector,” he said.
He said Zimbabwe needed a stronger venture capital ecosystem to provide equity risk capital to businesses without imposing the immediate collateral requirements associated with traditional lending.
“This is a very important institution in any economy. If you look at Africa overall, I don’t think we even have more than five proper venture capital funds outside South Africa,” Professor Ncube said.
The Minister said the Government would therefore invite institutional investors and other private-sector players to participate in recapitalising the fund and expanding its capacity to invest in start-ups and upgrade existing companies.
“We are going to be divesting in the next two years – a little bit out of our initial venture fund. It is our hope as Government that we can again crowd in long-term investors to partner with us to build a more robust National Venture Fund,” he said.
The fund, he added, would focus on taking equity positions in start-ups while also supporting the recapitalisation and upgrading of selected companies.
The push to mobilise private capital is part of a broader Government strategy to use capital markets and institutional investment to finance economic development, including infrastructure.
Professor Ncube said the public sector investment programme typically accounted for only about four to five percent of the national budget, making it necessary to develop mechanisms that could attract pension funds and other long-term investors into infrastructure projects.
He said such investments should be commercially viable and generate returns, rather than being treated as charity.
The Minister cited toll roads and other infrastructure with identifiable revenue streams as potential investment opportunities, arguing that user-generated income could support private financing arrangements.
