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Published: 2 Jun 2011 Quarterly

Zimbabwe Business Forecast Report

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The Zimbabwe Business Forecast Report provides essential macroeconomic, political and financial analysis for companies doing business in Zimbabwe.
Includes 3 FREE quarterly updates

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Report Description
The Zimbabwe Business Forecast Report helps businesses with market assessment, strategic planning and decision making to promote growth and profitability in Zimbabwe and is an essential tool for CEOs, Chairmen, Finance Directors/CFOs, Managing Directors, Marketing/Sales Directors with commercial interests in this emerging market. An influential new analysis of Zimbabwe's political, economic and financial prospects through end-2020, just published by award-winning forecasters, Business Monitor International (BMI).

Key Uses

Forecast the pace and stability of Zimbabwe's economic and industry growth through end-2020. Identify and evaluate adverse political and economic trends, to facilitate risk mitigation. Assess the critical shortcomings of the business environment that pose hidden barriers and costs to corporate profitability. Contextualise Zimbabwe's country risks against regional peers using BMI's country comparative risk ratings system. Evaluate external threats to doing business in Zimbabwe, including currency volatility, the commodity price boom and protectionist policies.

The Zimbabwe Business Forecast Report by Business Monitor International (BMI) includes three major sections: Political Outlook, Economic Outlook, and Business Environment.
Political Outlook:

What are the political risks to doing business in Zimbabwe over the next 10-years? BMI's Zimbabwe country risk ratings evaluate the short- and medium-term threats to political stability.

Political Outlook Contents

SWOT Analysis for the Zimbabwean Market - Political Strengths, Weaknesses, Opportunities and Threats facing Zimbabwe. Political Stability and Risk Assessment - BMI's risk ratings assess explicit short- and long-term risks to political stability; latest ratings, rankings and trends for Zimbabwe's risk are compared with regional and global averages. Current Administration and Policy-making BMI assesses the threats to the continuity of economic policy, and likely changes to the business operating environment.

Long-Term Political Outlook - BMI examines the structural risks to the stability of the political system and the dominant public policy issues likely to affect decision-makers, and outlines scenarios for how the polity could evolve over a decade horizon for key states.

Key Benefits

Benchmark Zimbabwe's risk profile against its neighbours, the global and regional average, allowing easy comparison of risks between key business markets. Identify, evaluate and anticipate political and security risks to the business environment, and to your company's current operations and future plans. Gain valuable insights into government and policy-making, through BMI's specialist team of analysts and economists, and their network of private and public sector sources.

Economic Outlook:

How will Zimbabwean economic policy-making and performance impact on corporate profitability over 2011-2020? BMI provides our fully independent 5 and 10-year forecasts for Zimbabwe through end-2020 for more than 50 economic and key industry indicators. We evaluate growth, and also forecast the impact of economic management.

Economic Outlook Contents

The Zimbabwe Business Forecast Report features explicit BMI economic forecasts for country, with supporting commentary and analysis, for end-2011 through to 2020 set against government view and our evaluation of global and regional prospects.

Typical Areas Covered:

Economic Activity - Real GDP growth; employment; inflation; consumption (wages, retail sales, confidence). Balance of Payments - Trade and investment; current and capital account. Monetary Policy - Interest rate trends (bank lending and deposit rates); inflation (retail price inflation and consumer price inflation). Exchange Rate Policy - Currency controls; foreign investment flows; exchange rates and foreign exchange reserves. Fiscal Policy - Macroeconomic strategy and policies; government finance (revenue, expenditure, debt); tax reforms. Foreign Direct Investment - Foreign direct investment approvals and inflows; the foreign investment climate.

External Debt - Debt profile (short- and long-term debt; public and private sector exposure). Global Assumptions Forecasts for each year to end-2015, covering major commodities, growth in all major regions; inflation, interest rates and exchange rates in the US, Japan, China and the eurozone. 10-Year Forecasts For Key States - Real and nominal GDP Growth; GDP by expenditure breakdown (where available); population; nominal per capita GDP (US$); inflation; exchange rates (versus US$ and, where appropriate, EUR); current account balance.

Key Benefits

Rely upon BMI's 100% independent forecast scenarios for Zimbabwe and underlying assumptions - we take no advertising and are privately-owned. Exploit the benefits of BMI's comprehensive and reliable macroeconomic database on Zimbabwe, sourced and fully maintained by BMI from an extensive network of private sector, government and multilateral contacts. Gain key insights into the current and future direction of government economic policy, which could significantly affect your companys business prospects, from BMIs team of analysts and economists.

Business Environment

Business environment risk ratings for Zimbabwe, benchmarked against ratings for regional neighbours. Country Competitiveness - Competitiveness of Zimbabwe's business operating environment in supporting corporate growth and profitability over the 5 and 10-year forecast horizon, compared with regional neighbours.

Business Environment Contents

Domestic Environment - Transparency, cronyism and corruption; labour market flexibility; corporate tax burden; interest rate levels; sophistication of banking sector and stock market; levels of business confidence; infrastructure and IT. Foreign Direct Investment - Analysis of foreign investment regime, foreign ownership laws; attractiveness of business environment to foreign investors; review of major foreign direct investments. Foreign Trade - Analysis of trading environment, government trade policy, liberalisation measures, tariffs and membership of trade areas.

Read about our other Business Forecast Reports

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Latin America
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Middle East
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Being Frank About Zimbabwes Business Environment

By Hilton-Mumba for ZimEye.org Published: July 13, 2009 Comment

(Analysis)The political situation is what we all perceive it to be. We co-operate in government and then when we go to parties we must competemost people cannot distinguish this dichotomy, said Elton Mangoma, Minister of Economic Planning and Investment Promotion in response to a question fielded by a journalist

concerning the fragility of the Inclusive Government. The Minister explained that the Zimbabwe International Investment Conference is aimed at re-branding the countrys image despite industrial capacity utilization standing at between 20% and 30%. He pointed out that the Ministry is targeting 60% capacity utilization by the end of this year. Without derogating from the generality of the foregoing, it is imperative to note that the countrys economy is at limbo as international relations between Zimbabwe and the West have not yet thawed. The nation awaits with abated breath for Minister Bitis mid-term fiscal policy announcement on the 16th of July and the concomitant monetary policy to follow suit. Quite inevitably the latter policy announcement shall be stalled for quite a while until the outstanding issue of the appointment of the Reserve Bank Governor is resolved. The debilitating effects on the macro-economy of the absence of a complementing monetary policy to the fiscal policy shall soon be noticed as balance of payments support continues to be negative in the short to medium term. The IMF pointed out that it is fairly satisfied with the progress made on the countrys economic front but expressed concern over regulation and operations of the Central Bank. The institution further says that there must be a clearance of arrears before there can be any resumption of significant financial assistance. Foreign currency shortages, inadequate balance of payments support and insufficient finance in the fiscus to support public sector programmes continue to be the bane of the countrys efforts towards recovery. Balloon Waiting To Pop

The countrys indebtedness has continued to spiral due to re-capitalization of interest while arrears escalate due to continual defaults on principal amounts that are falling due. The debt figure could shoot to well over U.S$ 7 Billion by 2011 if it is not systematically reduced, according to independent forecasts. Minister Biti revealed that external debt stands at U.S$4.6Billion as at 30 June 2009 while 65% is in arrears. At the moment Zimbabwe has no capacity to repay its debt and will not pay, said Minister Biti while speaking at a Zimbabwe Coalition on Debt and Development Conference. Multilateral financial institutions will certainly not be willing to release funds in the face of such statements. Revenue inflows were up to U.S$66.8Million in May from U.S$4.7Million in January this year although the increase falls short of the required figure for economic revival. Quite clearly, a mammoth task stands before the Inclusive Government as key economic fundamentals need to be addressed in the face of the unrelenting political intrigue currently obtaining. Banking Fiasco Over? The generality of the public is averse to the banking sector as the cash crises that occurred over the previous years eroded their confidence in the financial sector. Most people opt to keep their hard earned foreign currency at home rather than open an account and keep it there for safe-keeping. The bigger picture paints a gloomy scenario for the financial services sector. Barclays Bank Zimbabwe estimates that as the end of May 2009 U.S$475Million is being held in deposits out of the U.S$1Billion currently circulating in the economy. Unofficial statistics indicate that only 45% of the cash in the economy is held in deposits while the remaining figure is held elsewhere. The banking sector is finding the going tough as business is not as brisk as it was in the previous years. The RBZ recently announced that it would be enforcing the minimum capital requirements in the financial services sector. Commercial banks are required to have a minimum capital requirement of U.S$12.5Million. Due to client passivity it has emerged that most banks are under capitalized. Most banks cannot maintain operations while others are finding it difficult to meet staff costs.

Taking Stock of Investment Risks

The Zimbabwe International Investment Conference has revealed the ambivalence that pervades within the countrys investment climate. Not to be outdone, Deputy Prime Minister Arthur Mutambara has underscored the need for the creation of a suitable investment environment and what he termed the return to the rule of law. It is interesting to note that this statement is in direct contrast to the Presidents re-iteration that the Government is only obliged to pay compensation for improvements to farms and the Prime Ministers unequivocal support of that position. Concerns about property rights and security of tenure come to mind when there are distinct statements of contrast at policy level by one of the three principals. Potential investors from the United Kingdom, Germany and other European countries attended the conference. Easterly Economic Airflow

China is certainly letting its presence be felt not only in Zimbabwe but in most of Africa. The media has been awash with reports that Zimbabwe has received a U.S$ 950Million loan from China. However, Minister Biti reportedly scoffed claims that the figure had been facilitated. China has embarked on a continent wide exploration of Africa and her resources and does not have any qualms about human rights violations that the West always raises. The setback about Chinas power and influence is that it stands to benefit more than the recipient countries, at least in terms of resource utilization. Zimbabwe boasts platinum, gold, chrome and other strategic industrial resources; resources which China is very much interested in. Chinas presence in Africa has ruffled European feathers as Russias President Dmitry Medvedev decided to tour Africa and explore business opportunities. However, the West has remained averse and insists that it will not co-operate with nor fully engage Zimbabwe as long as President Mugabe remains in power. The geo-political interests at stake are substantially pronounced as the West and East engage in covert conflict over influence in Africa. Zimbabwes conundrum lies in taking full advantage of this scenario while resolving the pervading political stalemate; a momentous challenge that seems difficult to achieve. Assuming that these problems will disappear overnight will be an outlandish absurdity. (ZimEye, Zimbabwe)

The second annual Zimbabwe Mining Indaba will focus this year more on the business operating environment in Zimbabwe, rather than the countrys political landscape, reports Indaba organi- ser Utho Capital. The Zimbabwe Mining Indaba was launched last year during a period of sustained uncertainty in the mining industry in the country. The global financial crisis was largely coming to an end and investors were eager to broaden horizons into Zimbabwe but were cautious over political instabi- lity and political red tape. Utho Capital MD Andrew Mari reports that the 2009 Indaba was a good launch pad as it gave investors a clearer idea of issues, such as indigenisation, the appli- cation of prospecting and mining rights, and mining tax. He adds that it also served as a communication medium between investors and government. However, this is all set to change at this years indaba. The focus this year is on assisting matchmaking between foreign investors and local entities, including building a database of local opportunities vetted by the Ministry of Mines and Mining Development and culminating in optional site visits to mining areas on the third day of the Indaba.

For instance, if you drive along the Great Dyke, in the Ngezi area, youll see a lot of chrome-mining operations, ranging from small scale to medium sized, most of which are not efficiently exploiting the available resources. This could offer significant opportunities for investors to partner with such operators and consolidate these opera- tions, providing real empowerment, says Mari. To demonstrate this, we recently formed Utho Chrome, which is working with local small-scale mining operators and claim holders to provide them with equipment to improve their productivity and provide offtake options for their chrome production, with a view to consolidating these operations and building a smelter for local beneficiation, he explains. Operation consolidations will largely depend on consistent power supply, which has been a significant challenge in Zimbabwe over the past ten years. The 2009 Indaba proved a successful platform for the tabling of concerns that investors had about investing in Zimbabwe. However, there was some initial scepti- cism as to whether government would follow through on promises made at the Indaba. Mari reports that government has surprised everyone with the efficiency in which it has delivered certain promises. Key issues that are being tackled by the Department of Mines and Mining Development include the amendment of the Mines and Minerals Act, which is set to be ratified by Parliament in the current sitting. Further, progress has been made in the resolution and clarification of how the Indigenisation Act will be implemented. The recently created sectoral indigenisation boards, composed of both the private sector and government, will map out the implementation of the Act for each sector, which is an important acknowledge- ment by government of the need to craft sector-specific charters. This is likely to lead to a more broad-based scorecard-type approach to indigenisation. In addition, special grants are finally being issued, after many years. Eight special grants have been issued, which is key to the revival of exploration. The application of the use-it-or- lose-it principle by the Ministry of Mines is also encouraging, as it has started revoking the special grants or claims not being exploited, says Mari. Although there are signs of an economic revival in Zimbabwe, Mari reports that much work still needs to be done and South Africa has the opportunity to play a significant role in this. By and large, many South African companies are missing out on a massive opportunity to assist with the recapitalisation of Zimbabwes mining industry on a large scale. South African organisations, such as the Industrial Development Corporation (IDC) and the Export Credit Insurance Corporation, are playing a role in this regard, and the IDC has approved about five mining projects in Zimbabwe worth about $80- million. However, this is a drop in the ocean. What is required is not the business-as-usual approach, but a coordinated and serious marshalling of resources, says Mari. He adds that South Africa, as a country and as a government, does not fully appreciate the extent to which providing capi- tal equipment and technical services to the mining industry in Zimbabwe can assist in stimulating the South African eco- nomy, which is a win-win situa- tion for both countries. This gap will ultimately be taken up by other countries, and the increas- ing presence of companies from the Far East and Asia in Zim- babwe is an indication of the likely trend, concludes Mari

Zimbabwe Business Forecast Report

Product Description The Zimbabwe Business Forecast Report helps businesses with Zimbabwean market assessment, strategic planning and decision making to promote growth and profitability in Zimbabwe and is an essential tool for CEOs, Chairmen, Finance Directors/CFOs, Managing Directors, Marketing/Sales Directors with commercial interests in this emerging market. An influential new analysis of Zimbabwe's political, economic and financial prospects through end-2014, just published by award-winning forecasters, Business Monitor International. Key Uses Forecast the pace and stability of Zimbabwe's economic and industry growth through end-2014 Identify and evaluate adverse political and economic trends in Zimbabwe, to facilitate risk mitigation Assess the critical shortcomings of Zimbabwe's business environment that pose hidden barriers and costs to corporate profitability Contextualise Zimbabwe's country risks against regional peers using BMI's country comparative risk ratings system Target business opportunities in Zimbabwe's high-growth industry sectors Evaluate external threats to doing business in Zimbabwe, including currency volatility, the commodity price boom and protectionist policies The Zimbabwe Business Forecast Report by Business Monitor International (BMI) includes three major sections: Zimbabwe's Political Outlook, Zimbabwe's Economic Outlook and Zimbabwe's Business Environment. Zimbabwe's Political Outlook: What are the political risks to doing business in Zimbabwe over the next 5-years? BMI's Zimbabwe Country Risk Ratings evaluate the short- and medium-term threats posed by government instability, adverse economic policy-making, deterioration in the business environment and external shocks. Zimbabwe Political Outlook Contents SWOT Analysis for the Zimbabwean Market Political strengths, weaknesses, opportunities and threats facing Zimbabwe. Political Stability and Risk Assessment for Zimbabwe BMI's Risk Ratings assess explicit short and long-term risks to political stability; latest ratings, rankings and trends for Zimbabwe's risk are compared with regional and global averages. Current Administration and Policy-making in Zimbabwe BMI profiles key policy-makers and power-brokers in the Zimbabwean government, assessing threats to the continuity of Zimbabwean economic policy, and likely changes to the business operating environment through end-2018. Zimbabwean Foreign Policy BMI examines key trends and shifts in Zimbabwe's foreign relations and alignments with regional neighbours, the United States and Europe, focusing on external influences. Key Benefits Benchmark Zimbabwe's risk profile against its neighbours, the global and regional average, allowing easy comparison of risks between key business markets. Identify, evaluate and anticipate political and security risks to the business environment in Zimbabwe, and to your company's current operations and future plans. Gain valuable insights into the Zimbabwean government and policy-making, through BMI's specialist team of analysts and economists, and their exclusive network of private and public sector sources.

Zimbabwe's Economic Outlook: How will Zimbabwean economic policy-making and performance impact on corporate profitability over 2009-2014? BMI provides our fully independent 5-year forecasts for Zimbabwe through end-2014 for more than 35 macroeconomic variables. We evaluate Zimbabwean growth, and also forecast the impact of economic management, including central bank policy, on profitability. Zimbabwe Economic Outlook Contents The Zimbabwe Business Forecast Report features explicit BMI economic forecasts for country, with supporting commentary and analysis, for end-2010, 2011, 2012, 2013 and 2014 set against Zimbabwean government views. Underpinning our Zimbabwe forecasts are key assumptions for the global economy through end-2014, covering growth, inflation, employment, trade and investment, interest and exchange rates in the US, Japan and the Euro-zone. Coverage of Key Economic Issues in Zimbabwe Economic Activity in Zimbabwe Real GDP growth; industrial growth; employment growth; inflation and consumer prices; consumption (indicative wages, retail sales, consumer confidence) Fiscal Policy in Zimbabwe Current macroeconomic strategy and implementation policies; government finance (revenue, expenditure, budget balance); tax reforms Monetary Policy in Zimbabwe Interest rate trends (bank lending and deposit rates); inflation (retail price inflation, consumer price inflation); exchange rate policy in country; currency controls; influence of foreign direct investment inflows; exchange rates and foreign exchange reserves Balance of Payments in Zimbabwe Merchandise trade (exports, imports, trade balance); current and capital account balances Foreign Direct Investment in Zimbabwe Foreign direct investment approvals and inflows; the foreign investment climate Zimbabwean External Debt Debt profile (short- and long-term debt; public and private sector exposure) Key Benefits Rely upon BMI's 100% independent Forecast Scenarios for Zimbabwe and underlying assumptions - we take no advertising and are privately-owned. Exploit the benefits of BMI's comprehensive and reliable macroeconomic database on Zimbabwe, sourced and fully maintained by BMI from an extensive network of private sector, government and multilateral contacts. Gain key insights into the current and future direction of Zimbabwean government economic policy Zimbabwe's Business Environment: Zimbabwe's Business Environment Risk Rating with SWOT Analysis Short- and long-term business environment risk ratings for Zimbabwe, benchmarked against ratings for regional neighbours. Country Competitiveness for Zimbabwe Competitiveness of Zimbabwe's business operating environment in supporting corporate growth and profitability over the 5-year forecast horizon, compared with regional neighbours. Zimbabwe Business Environment Contents Zimbabwe's Domestic Environment. Transparency, cronyism and corruption; labour market flexibility; corporate tax burden; interest rate levels; access of private sector to lines of credit; sophistication of banking sector and stock market; levels of business confidence; infrastructure and IT Foreign Direct Investment in Zimbabwe Analysis of foreign investment regime, foreign ownership laws; attractiveness of business environment to foreign investors; review of major foreign direct investments over the last 24 months, and of strategic sectors attracting most interest Foreign Trade with Zimbabwe

Analysis of trading environment, government trade policy, liberalisation measures, tariffs and membership of trade areas