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 political emergence of President Robert Mugabe's wife Grace undermines Vice President Joice Mujuru's leadership ambitions. A clearer picture of the ongoing power struggle will emerge after the ruling ZANU-PF party holds its congress in December.

  • Zimbabwean economic growth will remain constrained by political risk, policy uncertainty, low commodity prices and a depreciating South African rand. A clear mandate for a reformist regime following the December ZANU-PF conference presents upside risks to our 2015 real GDP growth forecast of 2.7%.

  • 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.

Major Forecast Changes:

  • No major...

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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 47.1 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 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 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 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...

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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 the 2013/14 season, 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, and 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 productio...

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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 10.2% year-on-year (y-o-y) in November 2014 to 588 units. This brought sales for the first 11 months of 2014 to 6,460 units, a decline of 10.3% y-o-y.

We have downgraded our 2014 sales estimate and see the market contracting by 10.0%. However, sales will see a modest recovery in 2015 and we forecast growth to come in at 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 sales forecasts over the 2015-...

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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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Zimbabwe's construction sector is impeded by political   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%. Cash-rich Chinese companies have been the main foreign...

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Insurance

Zimbabwe Insurance

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BMI View: Zimbabwe's insurance industry will return to double-digit growth in 2015 following a relative slowdown in 2013 and 2014. Growth in excess of 15% is set to continue through to 2018. Life insurance will continue to grow faster than non-life, although both will expand at rates in excess of 10% for the foreseeable future. The highly competitive non-life sector struggles with low profitability, given price competition and low retention rates. This may ultimately hamper the sector's growth prospects over the coming years.

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 life premiums reached USD282mn in 2014 and will expand to over USD330mn in 2015. The sector is increasingly dominated by...

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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

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BMI View: The World Health Organization's approval of a quality control laboratory for medicines in Zimbabwe is a positive step for the country's pharmaceutical market. It will help to reduce the proportion of counterfeit medicines in circulation and increase the country's attractiveness to multinational drugmakers. Nevertheless, for the foreseeable future the dire economic and political outlook, reduced healthcare budget and underdeveloped local manufacturing industry will continue to limit investment.

Headline Expenditure Projections

  • Pharmaceuticals: USD378mn in 2013 to USD388mn in 2014; +2.8% in US dollar terms. Forecast revised up from last quarter's projections to better suit current market conditions.

Risk/Reward Index

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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 8.7TWh in 2015, mainly by exploiting coal and hydropower. This will be underpinned by a steady rise in demand for electricity, from13.3TWh to 21.4TWh over our forecast period, 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...

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Telecommunications

Zimbabwe Telecommunications

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BMI View : BMI's Q115 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 September 2014 and an update of our five-year forecasts to 2018 for the mobile, fixed-line and internet sectors.

Key Data

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Zimbabwe Telecommunications

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BMI View: As operators' top line financial performance comes under intense downward pressure from regulatory and competitive factors, cost-cutting and efficiency improvement solutions will gain prominence in the mobile markets of Zambia and Zimbabwe. 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 telecoms 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 market in Zimbabwe contracted by 0.9% q-o-q in the same period.

  • By the end of September 2014, Zambia had a mobile penetration rate of 62%...

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Tourism

Zimbabwe Tourism

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BMI View : The Zimbabwe tourism report examines a range of key indicators in this fledgling Sub-Saharan Africa tourism destination. We expect to see healthy growth in both inbound and outbound travel as Zimbabwe improves its international travel connections and raises its profile on the global tourism stage. Benefiting from a wide range of tourist attractions, the country has a lot to offer potential visitors and businesses, though restriction on foreign ownership may deter investors.

Zimbabwe has a large range of attractions to entice potential visitors, including the world famous Victoria Falls and a further four UNESCO World Heritage Sites. With several major national parks, Zimbabwe is set to develop itself as a safari and adventure holiday destination and could eventually compete with more established holiday destinations in the region such as South Africa. As it improves its marketing...

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