Cost of Capital in Zimbabwe

With the absence of meaninglul historical share performance, and government stock that can be termed risk free in the market, let alone long term government debt, one wonders whether portfolio theory and determination of cost of capital can be easily applied in Zimbabwe.

I would think companies make use of of payback periods more in our case as a dertermination of investment decision, if models such as NPV and IRR are used, probably a proxy of the South African market is used.

There is a clear indication that corporate finance principles in the stricktest sence face applicability challenges in Zimbabwe. In other economies for example, information on share performance can be tracked as far back as 1900. In Zimbabwe such information is scantly available and the local Central statistical office leaves a lot to be desired.

Universities which used be at the forefront of research in these and other related areas, are scantly resourced and many skills are being lost to the region and beyond.

Dony Mazingaizo has an interest in IFRS and Financial Management