HARARE – Zimbabwe’s construction industry is rebounding despite facing significant headwinds, including currency volatility, a challenging monetary policy environment, and declining commodity prices.
According to the IOL, the sector has benefited from robust activity in road construction, housing, and property development, industry leaders reported yesterday.
Piniel Mkushi, chairman of Cafca—the country’s sole cable manufacturer and a subsidiary of Reunert-controlled CBi Electric—highlighted the sector’s growth. “The construction sector is buoyant, spurred by road construction activities, new housing projects, and property development,” he said.
Economic Pressures Persist
Despite this growth, Zimbabwe’s trading environment remains volatile. Currency instability earlier in the year drove inflation higher, while fluctuating exchange rates continue to pose challenges for businesses trying to preserve value. Additionally, the 2023/2024 agricultural season’s drought and lower commodity prices have dampened demand across various sectors of the economy.
Cafca, which manufactures electric cables for local and regional markets, has adapted to these challenges by leveraging its market experience. The company reported a 10% increase in volumes for the year ending September, although revenue and operating profit dipped by 5% and 18%, respectively, due to a sales mix favouring lower-margin products.
Mining and Housing Spur Growth
Masimba Holdings, formerly Murray and Roberts, also reported growth driven by mining and housing infrastructure projects. The company recorded $45.8 million in revenue for the nine months ending September 2024, a 10% increase compared to the same period last year.
“The growth is attributable to a firm order book in mining and housing infrastructure segments, although liquidity constraints in the market subdued performance,” said Pearl Mutiti, Masimba’s company secretary.
Cost-containment measures and operational efficiencies helped maintain profitability, while enhanced working capital management improved the company’s liquidity position. As of the end of September, Masimba had borrowings of $1.1 million.
“We believe that securing sustainable financing for infrastructure development projects will anchor long-term growth and contribute to Zimbabwe’s socio-economic transformation,” Mutiti added.
Real Estate Sector Gains Momentum
Zimbabwe’s fluctuating monetary environment has also driven growth in the real estate sector, as investors seek value-preserving assets. Tigere Property Fund, a Zimbabwe Stock Exchange-listed company, reported increased activity in real estate development during the third quarter.
“The demand for value-preserving assets combined with exchange rate volatility has caused an upward shift in pricing across the real estate value chain,” Tigere said in a recent statement. “We believe that well-located, quality assets will retain their premium rental status.”
Future Outlook
While challenges persist, the construction and real estate sectors are demonstrating resilience, buoyed by infrastructure projects and a drive for value preservation in an uncertain economic climate. Industry stakeholders are optimistic that ongoing efforts to secure financing and implement cost-saving strategies will sustain growth and foster economic transformation in Zimbabwe.
As the nation grapples with broader economic challenges, the construction sector’s recovery offers a glimmer of hope for long-term development and stability.