Swedfund is one of many players now operating in the country with the aim of creating the right conditions for the economy to recover.

Under Robert Mugabe's regime, Zimbabwe developed into a country that was facing major economic challenges. The country’s domestic economy collapsed in the early 2000s, and in 2008 the country suffered hyperinflation which wiped out savings in the local currency. In 2017, Mugabe was ousted from power, but despite some initial optimism from the outside world following Mugabe's resignation, the economic situation remains difficult and food supplies are limited for much of the population. The domestic political situation is unstable. According to a report from the Swedish Ministry for Foreign Affairs, the authoritarian political climate and intolerance towards voices critical of the regime has long been a problem for the country's relatively weak and fragmented civil society organisations. This is particularly true of those who are striving to promote human rights and democratic governance.

In 2017, Swedfund invested USD 5 million through a loan to the bank NMB Zimbabwe. This bank was founded in 1993 and was primarily a corporate bank at the time. NMB Zimbabwe is a well-managed bank, which meets our sustainability criteria and has an approved gender equality policy. Swedfund's aim behind the investment was to channel financing to Zimbabwe's SME sector, and to support a local financial institution in a market which is otherwise dominated by foreign actors. NMB Zimbabwe's other investors include Arise (AfricInvest, development finance institution FMO from Holland and Norfund from Norway, along with Rabobank). At the same time as Swedfund awarded its loan, FMO loaned USD 10 million to NMB Zimbabwe. In connection with the financing, NMB Zimbabwe also presented a new strategy which focused on SMEs and financing for individual borrowers.

The loans help the bank to be more active in the informal economy and promote economic integration, with the aim of broadening the bank's products and services in order to reach customers it has not previously reached. NMB Zimbabwe's digitalisation strategy is now to try to reach out to more customers with its banking services.

Zimbabwe has an urgent need for investment and better economic policies to get the country back on its feet. The banking system is also facing major challenges. One factor behind this is a shortage of USD, which is accentuated by the currency reform that was carried out. At the time the reform was introduced, the ratio between the USD and the Zimbabwean dollar was 1:1. However, after the local currency declined in value, banks and companies borrowing in USD, including NMB Zimbabwe, suffered currency losses.

Swedfund will act additionally and catalytically. This requires us to take greater risks than other private investors. Our investment is influenced by many factors. We can influence some of these risks ourselves, while others may be linked to developments in the country, which could prevent an investment from developing in the way that was intended when Swedfund carried out the investment.

"We are long-term investors, and the way in which an investment develops and performs over time can vary. NMB in Zimbabwe is one such investment. It is basically a well-managed bank, but it is operating in a difficult market situation and we are working actively with other lenders to support NMB. One proof of that it is a well-managed bank is, that despite the macroeconomic challenges it is facing, the bank is performing well as regards the ESG dimensions,” says Jakob Larsson, Investment Manager at Swedfund.