No gold or Fds, Zimbabweans invest in cows instead: report

By CNBCTV18.com IST (Released)

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Zimbabwe has been renowned for battling hyperinflation since 2007 following ZANU-PF President Robert Mugabe’s disastrous Economic Structural Adjustment Program (ESAP). The country’s inflation had risen so much that the country completely stopped printing its own currency and in 2015 switched completely to the US dollar.

The loss of confidence in public banks and financial institutions when inflation hit nearly 200% meant that Zimbabweans began to invest in a new asset: cows. Headline price inflation continued to rise across the world as the cost of food and fuel soared following the Russian invasion of Ukraine. As a result, more and more households are looking for safe investment opportunities. For residents of the African country of Zimbabwe, who have lost savings in banks and pension funds over the past decades, cattle investments are proving very popular, DW reported.

Asset management companies around the country are coming up with creative ways for investors to hold “units” of cattle. Through unit trusts based on the purchase of livestock, investors can own certain units of livestock based on their investment. The bovine instrument vehicle proves popular in inflation-prone countries due to its ability to withstand price shocks.

As these companies reinvent ways to invest in livestock, in rural areas of Zimbabwe and other parts of the world, livestock remain an important source of wealth. The Food and Agriculture Organization of the United Nations (FAO) has estimated that livestock account for 35-38% of Zimbabwe’s gross domestic product (GDP).

But like any other investment, breeding is not entirely risk-free. Drought, disease and infection can decimate livestock populations and depress investments. But some economists still think the risk is worth it.

“Having investments in cows or animals is a better investment opportunity than gold coins,” economist Gift Mugano told DW. Mugano said that for unstable countries, livestock is a stable investment opportunity.

Zimbabwe has been renowned for battling hyperinflation since 2007 following ZANU-PF President Robert Mugabe’s disastrous Economic Structural Adjustment Program (ESAP). The country’s inflation had risen so much that the country completely stopped printing its own currency and in 2015 switched completely to the US dollar.

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