November 2023 economic update

The Zimbabwe National Chamber of Commerce (ZNCC) seeks to continuously provide regular economic updates to its members.

In this issue, we look at the economic projections and sectoral performances in agriculture, tourism and real estate sectors.

The private sector continues to face hurdles in keeping up with unanticipated changes in the regulatory and legal framework.

Thus, the business environment is characterised by high levels of uncertainty whereas stability in terms of prices is being experienced as the dominance of the US dollar as a currency of choice continues to grow.

The 2023 ZNCC Annual State of Industry and Commerce Survey is expected to be launched on December 7, 2023 at Cresta Lodge, in Msasa.

The 2023/24 summer cropping season is expected to record normal-to-below-normal rains and this is expected to have a negative impact on yields, particularly on seasoned grains like maize.

Farmers, without irrigable lands are encouraged to plant small grains and other drought-tolerant crops depending on the ecological region.

Although corn output is expected to decline in the 2023/24 season, the output is expected to be above the five-year average of 1,92 million tonnes. According to the Grain Marketing Board’s October 2023 report, maize output exceeded the target of 2,2 million tonnes a year in 2023.

Maize price averaged US$315 per tonne between September 6 and November 1, 2023, while that for wheat and soyabean averaged US$410/t and US$525/t, respectively, as per the Zimbabwe Mercantile Exchange records.

On the international market, agricultural commodities (maize, cotton, tobacco, and wheat) prices have been on a slightly downward trajectory between May and October 2023.

Maize prices declined by about 19 percent between January and October 2023 while wheat prices dropped by 3,3 percent between May and October 2023.

On the contrary, tobacco prices increased by about 23 percent between May and October 2023, from a price of US$3,01/kg on May 31, 2023 to US$3,70/kg on October 26, 2023.

With an uncertain and highly volatile international market, agricultural commodities prices are expected to recover at the beginning of the year, 2024.

In the best-case scenario, international tourist arrivals are expected to increase to 2 million, 2,2 million, and 2,4 million in 2023, 2024, and 2025, respectively, as per the Zimbabwe National Chamber of Commerce (ZNCC) forecasts.

The drop recorded in 2019, 2020, and 2021, is attributed to the advent of the global coronavirus pandemic. The increase in international tourist arrivals is expected to boost the fortunes of the tourism sector going into 2024.

Tourist arrivals in the first half of 2023 already surpassed the 2022 comparable period levels by 62 percent, according to the Ministry of Tourism and Hospitality Industry. The 2023 festive season will be hyped by tourism activities across various tourist sites in the country.

For the real estate sector, the retail landscape is experiencing a very mixed picture, with some markets enjoying resilient demand for space in smaller, community shopping centres, while other locations face the threat of oversupply and depressed rents.

The success and long-term sustainability of the cities are a function of vibrant property markets. Investment in and funding of property ventures and developments necessitate taking a long-term view that is properly informed.

Trends are shifting in the real estate and construction industries. While in prior years, companies relied on traditional financing, today more opportunities for project funding are available through public-private partnerships and investors.

Environmental, Sustainability and Governance (ESG) is an increasingly global focus for real estate investors, and we expect this to spur capital flows towards green-rated buildings.

A good example is the recently (November 20, 2023) commissioned WestProp Millenium Heights in Borrowdale. Factors that influence capital flows include political outlooks, climate, and environmental risk. Other sectors to look out for, which are not covered in this issue, include manufacturing, mining, and other service sectors outside tourism.

On a different but related note, the Zimbabwe National Chamber of Commerce, represented by the President, Mike Kamungeremu; the CEO, Christopher T. Mugaga; the Economist, Jephias Makiwa; and the Membership and Member Benefits Officer, Clemence Machadu paid a courtesy visit to the Minister of Industry and Commerce, Hon. Sithembiso. G. G. Nyoni and the Permanent Secretary, Dr Thomas Utete Wushe on November 20, 2023.

Issues discussed included the 2023 ZNCC Annual Congress Resolutions implementation. The chamber, together with the parent Ministry, will see through the implementation of the resolutions.

The resolutions include embracing markets for sustained macroeconomic stability, public evaluation of policies and incentives framework, quarterly engagements with the Parliament of Zimbabwe, joining the Climate Action, and a resolution on the implementation of the African Continental Free Trade Area, among others.

Also touched on was the upcoming 2023 Business Review Conference, where the 2023 Annual State of Industry and Commerce Survey is expected to be officially launched.

In conclusion, the discussed sectors have a huge potential to drive the economic trajectory of the country going into 2024.

A conducive business environment characterised by macroeconomic stability and a favourable policy landscape is of paramount importance to spur the economy towards growth rates that are in excess of five percent per annum in line with the National Development Strategy I targets.

The 2023 ZNCC Annual State of Industry and Commerce Survey, drafted in partnership with the Friedrich Naumann Foundation for Freedom and UNDP Zimbabwe, is expected to encompass the status of the implementation of the 2021 and 2022 Survey Results and also guide policymakers and businesses in future decision-making processes.

The Survey is comprehensive in nature as it encompasses a multisectoral analysis of the state of the economy.

This article was prepared by the Zimbabwe National Chamber of Commerce for Business Weekly.