But this week the country’s neighbour Zimbabwe thrust itself into the spotlight with the passing of a new law forcing overseas firms with local businesses worth more than $500,000 (£332,000) to sell off any majority stake in their companies to indigenous ownership. The idea tracks a similar law passed previously regarding the transfer of land ownership.
While investment in the high-risk country is sparse within the UK retail Unit Trust and OEIC universe, casting the net a little wider throws up some offshore funds with a strong weighting to Zimbabwe.
Imara - African Opportunities fund, which is domiciled in the Virgin Islands, has a 19 per cent weighting to Zimbabwe, according to Financial Express data on offshore mutual funds. Interestingly, despite having the heaviest weighting to Zimbabwe of the five funds overall identified as holding a weighting to the country, this fund is not the riskiest.
It returned 34.9 per cent to investors at a risk of 15 per cent over a one year period. To put this in context, Polunin Capital’s Developing Countries fund, which has just 2.8 per cent invested in Zimbabwe, returned 89.9 per cent, but at a risk of 25.4 per cent.
Compared to its Emerging Market sector, the Imara fund is underperforming: it returned 51.7 per cent in the 12 months to February, compared to the sector average of 81.1 per cent. It is, however, outperforming its sector by five per cent in the year-to-date.
Performance of fund vs sector
Source: Financial Express Analytics
"The situation in Zimbabwe is going from really bad to less bad," Jonathan Chew, managing director at Imara says.
"So much of the corruption there used to stem from the printing of money, which the dollarisation of the county has fixed. Companies out there are all really cheap," he adds.
Chew picks out the Zimbabwean group Delta Breweries – owned by SABMiller – as one stock which overseas investors will find value in.
Speaking on the law passed this week, Chew – whose focus is on Africa and the Imara African Opportunities fund – says it will not survive, as investment would dry up.
The fund invests primarily in financials, industrials, and food producers, and it holds British American Tobacco Kenya and Barclays Bank of Zimbabwe in its top five holdings.
The bank has spoken out briefly on the passing of the law, but has not stated what specific effects it could have on its local business.
"Barclays is aware of the Zimbabwe Indigenisation and Empowerment Act and is currently assessing the implications of the recently published implementation guidelines." Foreign capital is also seen as returning to the mining sector, in particular gold and platinum.
The Imara fund’s underperformance against its sector through 2009 is less surprising given sub-Saharan African (SSA) markets started badly last year, and never gained the momentum of other emerging markets.
Within that, Zimbabwe was one of the best performing markets in SSA, with a gain of 45 per cent. But, Imara points out that this was from a low and dubious base given the closure of the local market in December 2008 and January 2009.
Going forward, what is the outlook for investment in Zimbabwe? Despite the Indigenisation and Empowerment Act, Imara is optimistic. "Politics seems to be less of an issue in Zimbabwe these days," Chew says.
"The signing of the investment protection agreement with South Africa was a very positive step, as was the December budget, and finally progress is being made on the outstanding issues of the Global Political Agreement [involving the ruling Zanu-PF and MDC parties]."