Country Profile: ZIMBABWE PDF Print E-mail
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Southern Africa
Monday, 23 November 2009 00:00

This country profile was published in November 2009 in our annual 'Africa in 2010' issue. The next edition, 'Africa in 2011' will be on sale in November 2010.

Country Profile

Top Zimbabwean Companies

Top Zimabwean Banks

While the rest of the world is grappling with the economics of how to beat the global recession, for this country of 12m people that has been through unprecedented economic turmoil in the last eight years, the word ‘recession’ is old hat. It is now a country on the road to recovery. It is estimated that Zimbabwe’s economy shrunk by more than 48% between 2000 and 2008, against the backdrop of isolation from the international community due to President Robert Mugabe’s repressive policies. 


 

The controversial farm invasions of 2000 that saw almost 4,000 white commercial farmers driven off their land plunged the country’s agro-based economy into turmoil. President Mugabe’s attempts to hold onto power at all costs and to aggressively address land imbalances that favoured a tiny white minority led to international isolation. The gains of the post-independence decade – GDP growth averaged 3.9% per annum in the 1980s and 1990s – soon became a distant memory.


 

The establishment of a tripartite government in early 2009, comprising President Robert Mugabe’s Zimbabwe African National Union-Patriotic Front (ZANU-PF), Prime Minister Morgan Tsvangirai’s Movement for Democratic Change (MDC-T) and deputy prime minister Arthur Mutambara’s splinter MDC-M, has ushered in fresh hope. After economic decline of -14.1% in 2008, finance minister Tendai Biti projected growth of 7% in 2009 and a further 13% in 2010, while the IMF estimates 3.7% in 2009 and 6% in 2010. Both scenarios indicate that Zimbabwe is on the mend, despite political disagreements bedevilling the shaky 
coalition. Behind the scenes, politicians say that the survival of the inclusive government is the only real hope because anything short of it would be catastrophic to the economy and to their own political relevance.

 

ZimbabweWhile getting the economy right may be a unifying factor among the rival political parties, they know that the prevailing arrangement is temporary, with fresh elections expected as soon as a new constitution has been put in place. Initially, this arrangement was meant to last 18 months, but a much longer process is likely so that Zimbabweans may not be able to vote for their leaders of choice again until 2013. After the violence that characterised the 2008 elections, there will be little appetite to risk a repeat in the near future, and MDC-T still hopes a new constitution will create institutions and an environment favourable to free and fair elections.


 

MDC-T is trying to use the discussions on the new constitution and its participation in government to get more support in rural areas ahead of new 
elections. Traditional chiefs, who have long been a core group of supporters for Mugabe, are warming to 
Tsvangirai who can now access these important community leaders because of his involvement in government. Whatever differences the MDC-T may have with Mugabe – as shown by the MDC-T’s withdrawal of cooperation from the government during October and early November – the party knows participation is necessary to guarantee its own survival. 


 

Finance minister Biti aptly summed up the predicament when he said: “I am not going to quit 
because I knew that I was going to swim in sewage.” Public opinion is heavily in favour of the inclusive government, with 80% of the population approving, according to a late 2009 survey by the Mass Public Opinion Institute. But the credibility of the parties is questioned, with 46% seeing the Global Political Agreement (GPA) of September 2008 as genuine, and 32% doubting the sincerity of the parties involved.


 

The future of the old revolutionary ZANU-PF party is in doubt. Since signing the GPA, its strategy has been to stall progress in the hope that people will forget past miseries. It has delayed the constitution-making process and is still professing loyalty to its 85-year-old leader who remains bent on clinging to power. The readmission of independent MP and former information minister Jonathan Moyo in October reveals ZANU-PF’s desperation; he was the brains behind two of the country’s most repressive laws which closed down private newspapers. ZANU-PF’s Women’s League and Youth League conferences in late 2009 were plagued by factionalism and violence.

 


The factors that will determine Zimbabwe’s fortunes in 2010 comprise a weighty list: the drafting of a constitution to pave the way for elections and the implementation of all outstanding issues in the GPA; the reversal of Mugabe’s unilateral 
appointments of Reserve Bank of Zimbabwe (RBZ) 
governor Gideon Gono and attorney-general Johannes Tomana; the swearing in of MDC-T’s Roy Bennett as deputy agriculture minister; the liberalisation of the media; and the demilitarisation of quasi-governmental institutions.


 

Yet in the business community, despite a lack of liquidity and a barely-functioning financial 
sector, there is an air of cautious optimism. The fact that ZANU-PF has relinquished some of its power is a positive step, along with the variety of trade delegations, investment conferences and the ability of businesses to plan and to put an accurate cost to such plans.


 

Dollarisation of the economy has had an immediate effect on the business landscape, eliminating the inflation that had made all planning impossible. The government has a line-up for privatisations which has attracted interest. The steel company Zisco appears to be a test case, with Arcelor 
Mittal favourite to take control. Revenues raised from such sales will be an essential source of funds if foreign aid is not forthcoming.


 

The retail sector has expanded, unhindered by price controls, and some local industries are re-establishing themselves despite power and water shortages. Banking remains beholden to the politically-controlled RBZ – the industry regulator and an integral part of the interbank settlement systems – as the battle for control between Biti’s finance ministry and governor Gono’s RBZ continues. If political issues are resolved, this sector will see a round of consolidation. The stock exchange also suffers from a lack of liquidity, and it is difficult to know whether price levels and movements are speculative or reflect market fundamentals.

 

Zimbabwe GraphTourism will remain anaemic until the country’s image is restored as a safe destination and a payments system is re-introduced. Revival of air travel is dependent on the politicians, with airlines negotiating to buy Air Zimbabwe and companies applying to fly domestic and Johannesburg-bound routes.


 

The most vexed sector is agriculture. The loss of commercial production was the biggest single contributing factor to economic collapse. In 2010, deals will be concluded with 
foreign parties whereby the right to farm large tracts will be granted, but the beneficiaries will be obscured, and it is conceivable that even low levels of processing will be done outside the country.


 

Infrastructure projects such as road and power projects could attract funding from the World Bank, and the MDC-T favours private sector participation. With the Zimbabwe Electricity Supply Authority heavily indebted to South Africa’s Eskom, it is conceivable that ownership could change hands in return for debt cancellation and investment. But the success of such ideas requires civil service reform to which ZANU-PF will be reluctant to agree.

 

 

No big mining deals likely just yet

 

The mining sector is being eyed by many, both inside and outside the country. Gold mining companies no longer have to sell their product to the Reserve Bank – which set prices low and did not always pay – and can now export to dealers of their choice, leading to a revival of interest. The threat by the ZANU-PF government to demand a majority stake in mining ventures has not been rescinded by the 
government of national unity and until it is, there will be few significant investments in the sector.

 


There is much talk of encouraging the “small-scale sector” (echoed by some in the MDC)  – but it produces more land degradation than mineral production. Whether politicians actually believe that mineral production can be restored to meaningful levels without investment and skills from the big international houses is difficult to gauge. There are utterances from the MDC that it is considering changes to existing mining legislation – which investors are generally happy with in its current form and has raised the thorny question of political interference in the mining industry. At present, the lack of clear policy from the MDC, plus ZANU-PF’s desire for mineral riches, bodes ill for an early resumption of investment and production.


Zimbabwe's Top Companies


No companies from Zimbabwe featured in The Africa's Report's Top 500 Companies in Africa 2009.

 

 

Zimbabwe's Top Banks

Rank 09

The Afrique report
TOP 500 companies the africa report
Rank 08

TOP 500 companies
The Afrique report
Company name


Country


TOTAL ASSETS

TOP 500 companies egypt
NET EARNINGS

TOP 500 companies
CREDIT


TOP 500 companies tunisia
DEPOSITS


135 - STANBIC BANK ZIMBABWE ZIMBABWE 743267.65 35005.63 647557.46 697462.42
146 - INFRASTRUCTURE DEV. BANK OF ZIMBABWE * ZIMBABWE 654189.72 348801.84 31776.27 25483.69
FIGURES FOR 2008. US$ THOUSANDS. *2007 FIGURES.
 
 

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