Zimbabwe has historically been one of the most robust economies in southern Africa, with substantial natural resources and a highly regarded workforce. The performance of the Zimbabwean economy will remain inextricably linked to the policy and political climate over the coming years. Zimbabwe’s government is gradually beginning to re-engage with the international development community.

We keep our clients informed of the latest market moves and political developments in Zimbabwe, as part of our 'top-down' and 'bottom-up' perspective. Clients also benefit from in-depth analysis on 12 of Zimbabwe’s most important industries. We provide interactive data and forecasting alongside detailed and risk-assessed analysis from our expert research teams. Our aim is to keep you ahead of the game, so you can do business with ease in Zimbabwe.

Country Risk

Zimbabwe Country Risk

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Core Views:

  • The succession process in Zimbabwe has become somewhat clearer. The removal of Vice President Joice Mujuru at ZANU-PF's five-year congress in early December 2014 seemingly clears the path for her main rival Emmerson Mnangagwa to take the helm once Mugabe eventually departs the scene. Even so, there remains no little uncertainty over the issue, not least given that all the power now lies within the president's hands.

  • Political and policy uncertainty will continue to deter much-needed investment into the moribund Zimbabwean economy, while a depreciating South African rand and weak commodity prices will also weigh on economic activity.

  • The Zimbabwean economy will remain near deflationary territory over the coming quarters thanks to weak demand, a depreciating South African rand and low oil prices.

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Zimbabwe Operational Risk Coverage (9)

Zimbabwe Operational Risk

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BMI View: Zimbabwe's business environment has deteriorated markedly in recent years, which will be a headwind to economic performance over the medium term at least. Corruption will continue to pose a serious challenge to many companies doing business in the country, though large multinationals have appeared able to ward off intervention from the authorities to date. Property rights are likely to remain poor, particularly for foreign firms who are facing an uncertain indigenisation drive. In addition, labour market health has seen an alarming decline, and many basic public services including water and power are still unreliable.

Zimbabwe's business environment has many weaknesses, including endemic corruption, unreliable public services and a crumbling transport network. Nevertheless,...

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Zimbabwe Crime & Security

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Businesses and foreign workers in Zimbabwe benefit from a safer environment than in most other Sub-Saharan African countries, with relatively low crime rates, a negligible threat from domestic or international terrorism, and a secure strategic environment. Nevertheless, we highlight that political violence during presidential elections remains an issue, particularly in Harare, and corruption seriously hinders the response of the police services to crimes. Zimbabwe performs well overall in the Sub-Saharan Africa (SSA) region in the BMI Crime and Security Risk Index, with a score of 47.1 out of 100 placing the country 13th out of 44 states. Thus, in terms of Crime and Security Risk, Zimbabwe trails four of its neighbouring countries, Namibia (2 nd), Botswana (3 rd), South Africa (5 th) and Zambia (7 th), and is ahead of only Mozambique (23 rd).

Increasing regional integration and a lack of...

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Zimbabwe Labour Market

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BMI View: Zimbabwe's labour market cannot compete with its regional peers owing to low levels of productivity, public health issues, and the residual effects from the economic collapse and hyperinflation during the mid-2000s. Although Zimbabwe has a favourable demographic situation, with more than 60% of the population younger than 24, the country has proved incapable of turning its population into skilled workers, and we see no sign of this situation improving over the medium term. Taking these factors into consideration, BMI awards Zimbabwe a score of 36.3 out of 100 for Labour Market Risk, placing the country 28 thin Sub-Saharan Africa (SSA), between Congo Republic and Cape Verde.

The category of Labour Costs presents the highest level of risk to businesses operating in the country, owing to the high cost...

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Zimbabwe Logistics

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Zimbabwe has a limited and low quality transport network, with a lack of access to maritime trade flows and the added stress placed on an ailing road and rail network, Zimbabwe's reliance on its neighbouring countries for efficient trade poses a threat to investors. Additionally, movement of goods is hampered by lengthy bureaucracy and relatively expensive trade procedures, creating additional costs for businesses. Although the country presents well in terms of its market size, due to steady economic growth following years of decline, the country is at risk from adverse affects of its current trade deficit and expensive fuel costs, compromising the success of business operations in the country.

Zimbabwe scores 34.7 out of 100 in the BMI Logistics Risk Index, placing the country in 22 nd position out of 44 countries in the Sub-Saharan Africa region. This puts Zimbabwe behind neighbouring countries...

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Zimbabwe Trade & Investment

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BMI View: The combination of endemic corruption, weak rule of law, caps on foreign investment and a lack of its own currency serve to make Zimbabwe an unattractive operating environment for foreign firms. Corruption in particular poses a major obstacle to foreign investment and participation in the economy by lowering the accountability and impartiality of the judicial system, incurring adverse consequences for important procedures such as the filing and paying of taxes, the resolution of contractual disputes and the registration of property. Intellectual property rights are also poorly enforced, raising the probability of financial losses due to copyright violations and piracy. Taking these factors into consideration, BMI awards Zimbabwe a score of 22.3 out of 100 for overall Trade and Investment Risk, placing the country 42 ndout of 44 states in Sub-Saharan Africa (SSA).

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Zimbabwe Industry Coverage (12)

Agribusiness

Zimbabwe Agribusiness

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BMI View: We expect Zimbabwe to remain a net corn importer over the longer term. Over the next five years, we expect production of the grain to demonstrate moderate growth, although this will partly be due to base effects; production will remain well below the totals seen in the early 2000s. We are more optimistic regarding the sugar sector, where access to key markets and potential for productivity improvements will drive production over the long term. Although we forecast a domestic sugar market surplus, the sector remains below...

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Autos

Zimbabwe Autos

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According to Renault Group, which tracks industry sales in Zimbabwe, domestic auto sales contracted by 26.6% year-on-year (y-o-y) in February to 431 units. This brought sales for the first two months of 2015 to 862 units, a decline of 26.6% y-o-y.

Total domestic auto sales fell by 10.3% to 7,048 units in 2014 and we have downgraded our 2015 sales estimate, seeing the market contracting by 15.0% (versus our previous forecast for an increase of 5.0%).

One major headwind we see for sales over the next few years is the recent increase in duties on car imports. While we believe this move is also influenced by the government's intention to develop the local auto sector, we have previously voiced our view that the local production industry has too many flawed fundamentals to support the demand created by such protectionist policies.

This has prompted us to downgrade our...

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Commercial Banking

Zimbabwe Commercial Banking

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Commercial Banking Sector Indicators
Date Total assets Client loans Bond portfolio Other Liabilities and capital Capital Client deposits

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Food & Drink

Zimbabwe Food & Drink

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BMI View : The Zimbabwean economy will remain near deflationary territory over the coming quarters thanks to weak demand, a depreciating South African rand and low oil prices. The Zimbabwean economy continues to flirt with deflationary territory with the latest data showing that inflation was 0.1% year-on-year in September 2014. Underpinning low price growth is subdued domestic demand, a weak South African rand relative to the US dollar and the decline in international oil prices witnessed over recent months. There is little reason to believe that any of these factors will meaningfully reverse over the coming months and we therefore think that annual inflation will remain at around zero into 2015.

Key Industry Trends

Nestlé Zimbabwe Expansion: The world's largest producer of...

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Infrastructure

Zimbabwe Infrastructure

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BMI View: The country's construction industry remains high risk, poorly financed and subject to the unattractive investment policies of President Robert Mugabe, with average annual real growth between 2015-2024 expected to be a mediocre 2.6%.

Zimbabwe holds a decent amount of potential as a frontier growth market in Southern Africa, however is highly unlikely to meet that potential under current conditions - namely the policies enacted by President Robert Mugabe and his regime, which make it risky for foreign investors to gain access to the market. The mining sector, which is a key growth driver for the country's infrastructure, has in the past been hit hard by indigenisation drives. With Mugabe...

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Insurance

Zimbabwe Insurance

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BMI View: Zimbabwe's insurance industry will once again boast double digit growth in 2015, in both the life and non-life sectors. The life sector will continue to dominate the insurance market and outpace non-life growth, given the attractiveness of the former as a long term savings option. However, one major insurance company - Old Mutual - dominates the market, which will hurt competitiveness.

We remain cautiously optimistic for the prospects of Zimbabwe's insurance industry. Retention ratios are high, claims ratios are low and strong growth is expected to continue. There are, however, many persistent issues and threats. As a young insurance market, the regulatory framework remains untested, particularly in the fast-growing life sector. Recent actions to punish under-capitalised insurers and the withdrawal of the licenses of four insurers and one...

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Mining

Zimbabwe Mining

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BMI View: Zimbabwe will achieve solid mining sector growth over our forecast period to 2018. Platinum production will be the main driver of growth, while growth in diamond output will be moderate and the country will remain a very small producer of gold. Weak global commodity prices and a deteriorating business environment will present downside risk to our forecasts.

Zimbabwe is richly endowed with deposits of chrome, gold, nickel, diamonds and platinum, among other minerals. Its gold reserves are among the largest in Africa, while it has the world's second-largest platinum reserves. Diamond reserves are measured to be the second-largest globally after Russia.

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Pharmaceuticals & Healthcare

Zimbabwe Pharmaceuticals & Healthcare

Power

Zimbabwe Power

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BMI View: The outlook for Zimbabwe's power sector is moderate but market opportunities for private investors are limited. On the upside, a number of major projects will boost generation to 17.1TWh by 2024 up from 8.8TWh in 2015, mainly by exploiting coal and hydropower. This will be underpinned by a steady rise in demand for electricity, from 13.3TWh to 21.9TWh over the same timeframe, as the economy and population grows. However, the operating environment will remain extremely challenging.

A major obstacle will be the absence of a regulatory framework which allows for private competition and the effective insolvency of Zimbabwe Electricity Supply Authority (...

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Telecommunications

Zimbabwe Telecommunications

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BMI View : BMI's Q215 Southern Africa report analyses the latest industry, regulatory and macroeconomic developments in the telecoms markets in Angola, Botswana, Mozambique, Mauritius and Namibia. It also contains our estimate of the market data relating to the end of 2014 and an update of our five-year forecasts to 2019 for the mobile, fixed-line and internet sectors.

Key...

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Zimbabwe Telecommunications

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BMI View: As operators' top line financial performance comes under intense pressure from regulatory and competitive factors, cost-cutting and efficiency improvement solutions will become increasingly important in Zambia and Zimbabwe's mobile markets. Zambia's two biggest mobile operators have outsourced the management of their tower assets to a third-party company, while we expect Zimbabwe's operators to give serious consideration to the regulator's call for infrastructure sharing based on an open access model.

Key data

  • The mobile market in Zambia grew by 2.5% quarter-on-quarter (q-o-q) in Q314 following three consecutive quarters of contraction, while the Zimbabwean market contracted by 0.9% q-o-q.

  • By the end of September 2014 Zambia had a mobile penetration rate...

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Tourism

Zimbabwe Tourism

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BMI View : We expect Zimbabwe's tourism sector to see healthy growth throughout our forecast period as the country works to upgrade tourism infrastructure and transport links. Both inbound and outbound tourism is set to rise as recourses are channelled into promoting the country's profile on the global stage. However, restrictions concerning foreign ownership may deter investors, and a new 15% tax on tourist accommodation could deter potential visitors and stunt industry growth.

Zimbabwe has a number of attractions that draw in tourists. The most famous is Victoria Falls - one of the Seven Wonders of the World. Alongside this the country is home to four other UNESCO World Heritage Sites and several...

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