Our comprehensive assessment of Zimbabwe's operating environment and the outlook for its leading sectors are formed by bringing together a wealth of data on global markets that affect Zimbabwe, as well as the latest industry developments that could impact Zimbabwe's industries. This unique integrated approach has given us an impeccable track-record for predicting important shifts in the markets, ensuring you’re aware of the latest market opportunities and risks in Zimbabwe before your competitors.

Country Risk

Zimbabwe Country Risk

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Core Views:

  • Challenges for Zimbabwe's economy continue to mount and we have downgraded our 2014 and 2015 growth forecasts to 1.7% and 2.2% respectively from 3.1% and 3.3% previously. Only a real contraction in imports, on the back of weak domestic demand, has prevented us from revising the headline forecast into negative territory.

  • Lower historic and forecast current account deficits do not indicate a stabilisation of the external accounts. They are rather the result of weak import demand that is a stark illustration of the difficulties being faced by the Zimbabwean economy.

  • Inflation in Zimbabwe will remain in negative or very low positive territory over the coming 12 months. The extent to which this boosts purchasing power will be limited by the effect that rand weakness has had on the dollar value of remittances from South Africa....

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Zimbabwe Operational Risk Coverage (9)

Zimbabwe Operational Risk

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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 extremely insecure, 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, foreign players are drawn in by the country's mining opportunities. Political...

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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 47.0 out of 100 placing the country 12th 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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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 34.1 out of 100 for Labour Market Risk, placing the country 20 th in Sub-Saharan Africa (SSA), between Burundi and Cote d'Ivoire.

Zimbabwe enforces comparatively high national minimum wages across the majority of sectors in the economy, which leads to an unproductive labour force in relation to wages. In addition, extensive regulations surround the contracting of...

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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 tradeflows 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 35.6 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 South Africa...

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Zimbabwe Trade & Investment

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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 and ICT laws 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 32.1 out of 100 for overall Trade and Investment Risk, placing the country 26th out of 44 states in Sub-Saharan Africa (SSA).

Although heightened legal risk profiles are...

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Zimbabwe Industry Coverage (12)

Agribusiness

Zimbabwe Agribusiness

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BMI View: Although we have revised up our corn production forecasts for t he 2013/14 season, we remain relatively pessimistic over the long term. Indeed, even with the output upgrades, the US   D epartment of A griculture expects Zimbabwe to import a record amount of corn in 2013/14 . Over the long term, we expect production of the grain to demonstrate   moderate growth , although this will partly be due to base effects ,...

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Autos

Zimbabwe Autos

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We expect another vehicle sales decline of 3.0% in 2014 following news from the Motor Industry Association of Zimbabwe, while developments in the latter months of the year will pose a threat to sales over the remainder of our forecast period to 2018. Chief among these is the import tariffs, which are set to be introduced in November and will impact sales for the last month of the year and beyond.

From November, tariffs of 40% and 60% will be applied to imports of single-cab and double-cab trucks respectively, while buses will also be subject to tariffs. Impacting the car segment is the mandate that the government buy only vehicles assembled by Willowvale Mazda Motor Industries, or Quest Motor, as a move to support the local production industry.

The government's plans to encourage domestic vehicle assembly are positive in terms of supporting the country's autos industry....

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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 : We believe private consumption will be an important engine of growth in the years ahead. Although the relative stasis of the manufacturing industry has constrained job creation, consumption in Zimbabwe has continued to be supported by massive remittance inflows from a large diaspora population, and this is unlikely to change. Consumption will therefore be supported even in the absence of an improvement in domestic productivity.

Private consumption will be one of the more resilient components of GDP, supported by large remittance inflows from the many Zimbabweans living abroad. Furthermore, one of the upsides of the tight liquidity conditions is that inflation will remain low - price growth came in at 0.9% in September 2013 and we are forecasting that it will remain below 4.0% in 2014. These low...

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Infrastructure

Zimbabwe Infrastructure

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Zimbabwe's construction sector   is impeded by p olitical   uncertainty that continues to dissuade   investors . Despite vast resources , the country's construction industry remains weak compared with regional peers ,   as average growth over the forecast period (2014-2023) will be just 3.29%. C ash - rich Chinese companies have been the main fore ign...

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Insurance

Zimbabwe Insurance

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BMI View: The insurance industry has grown rapidly in recent years, with gross premiums up from USD111mn in 2010 to over USD500mn by 2014. The pace of expansion will slow, but remain in excess of 16-17% over the next five-years. Life insurance will, marginally, outperform the non-life sector, but the most prominent growth area will be credit/financial risk insurance. Motor cover will remain the non-life sector's largest line by some margin , accounting for over 40% of all non-life premiums. All insurance companies, in both life and non-life business, face risks from the country's wider economic and political woes.

Zimbabwe's life insurance sector has been one of the fastest growing not only in the region, but globally over the past five years. From an extremely low base of just USD34mn in 2009, gross premiums reached USD282mn in 2014 and will...

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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...

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Pharmaceuticals & Healthcare

Zimbabwe Pharmaceuticals & Healthcare

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BMI View: Zimbabwe's poor economic outlook, in addition to the government announcing budget cuts to healthcare, means that we do not expect any meaningful interest from pharmaceutical companies in the medium-to-long term. The already dire situation, in which the health service is heavily reliant on donations, lacks skilled workers and essential medicines, and the fact that the vast majority of the healthcare budget is not even disbursed, leads us to hold a very bleak outlook for the healthcare market in the country.

Headline Expenditure Projections

  • Pharmaceuticals: USD233mn in 2013 to USD251mn in 2014; +7.5% in US dollar terms. Forecast remains in line with last quarter's projections.

Risk/Reward Rating

In BMI...

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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 15.7TWh by 2023 up from 8.2TWh in 2014, mainly by exploiting coal and hydropower. This will be underpinned by a steady rise in demand for electricity, from   1 2.9 TWh to 21.4TWh over the 10-year 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...

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Telecommunications

Zimbabwe Telecommunications

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BMI View :  BMI's Q 4 14 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 analysis of the latest market data relating to the end of June 2014   a nd an update of   our five-year forecasts to 2018 for the mobile, fixed-...

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Zimbabwe Telecommunications

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BMI View:  The mobile markets in Zambia and Zimbabwe will witness strong growth of mobile data services on the back of network development by the operators, improved international connectivity and the proliferation of low-cost smartphones. However, the growth in the wireline sectors of both countries will be tempered by underinvestment in network infrastructure development, partly due to a lack of competition, and continued fixed-to-mobile substitution. Our five-year growth forecast, through to 2018, for the telecoms markets in Zambia and Zimbabwe expects the broadband sector to record the fastest growth, driven by wireless access technologies. 

Key data

  • The mobile markets in Zambia and Zimbabwe contracted by 2.5% quarter-on-quarter (q-o-q) and 1.2% q-o-q in Q214, mainly due to the disconnection of inactive and unregistered SIMs

    ...

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Tourism

Zimbabwe Tourism

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Zimbabwe's tourism market has been noted as a substantial potential growth area. The country benefits from enormous untapped natural resources and is well located in the midst of the emerging Sub-Saharan Africa region and near regional powerhouse South Africa. While we are forecasting healthy growth in terms of arrivals and outbound travel, serious concerns remain regarding the quality of the country's transport infrastructure and the current limitations on foreign ownership and investment, which will curtail growth, at least in the short-to-medium term.

Zimbabwe, home to the world-famous Victoria Falls, one of the seven natural wonders of the world, and four other UNESCO World Heritage Sites, undoubtedly has a lot to offer potential visitors. The country has several major national parks and could build a reputation as a safari destination to compete with region-leading South Africa.

Arrivals are expected to reach 2.8mn...

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