HARARE – In a stark portrayal of Zimbabwe’s economic landscape, a report by Mark & Associates Consulting Group characterizes many of the country’s businesses as “dogs and zombie companies” due to their stagnation, limited cash-flows, and low market share.
The report, ‘Zimbabwe 2024 Outlook & Strategy: Barbarians at the Gate,’ underscores the struggle faced by these firms in a world increasingly governed by AI and robots, given their sub-optimal capacity utilisation levels.
The Cost of Stagnation
The survival of these uncompetitive entities, the report argues, hampers productive growth by monopolizing capital and talent that could be better employed in more successful sectors. Despite these hurdles, the Zimbabwe National Statistics Agency reported marginal growth in capacity utilisation for larger manufacturing and mining sectors in the third quarter of 2023, while smaller and medium companies lagged.
Forewarning of Chaotic Growth Cycles
Without a sweeping overhaul of their corporate structures, companies face potentially chaotic growth cycles in 2024. The report predicts a mass exodus of top professionals who will likely transfer their expertise and clientele elsewhere, either by emigration or by founding new ventures.
Driving Factors of the Exodus
This professional migration is primarily attributed to economic headwinds, towering taxes, and a massive brain-drain. The 2022 census reveals that nearly 909,000 individuals have emigrated from Zimbabwe, primarily for employment.
The report also cites capital constraints, policy shifts, and electricity shortages as significant productivity impediments, with the situation being exacerbated by severe electricity load shedding due to technical issues at power plants, diminished dam levels, and import constraints.
Opportunities Amidst Challenges
Despite these challenges, there are potential avenues for growth. The country’s agricultural sector, for example, could see improvements through promoting the cultivation of sorghum and millet, enhancing mechanization, and providing food processing machinery.
The World Bank has revised Zimbabwe’s economic growth projections for 2023 and 2024 upwards, with the GDP projected to grow by 3.5 percent in 2024. However, the IMF warns of future shocks and challenges, predicting a soft landing scenario for the global economy in 2024.