Farai Mabeza, Senior Staff Writer 
ZIMBABWE’S investment performance in 2024 will be heavily influenced by inflation expectations, fuelled by a depreciating local currency and persistent political and economic uncertainties, the Old Mutual Investment Group (OMIG) has warned.
This comes as authorities are struggling to preserve the value of the local currency whose depreciation is the key driver of inflation.
“Environment risks are likely to remain anchored around the political economy, monetary policy fragility, and extreme weather events,” OMIG stated in a research note.
“While political risks are expected to recede somewhat as the year unfolds, the appointment of a new Central Bank governor in 2024 presents a muted risk for policy stability, and extreme weather events pose a seemingly unavoidable threat to economic activity.”
John Mushayavanhu
Veteran banker John Mushayavanhu was recently appointed as the successor to outgoing Reserve Bank governor John Mangudya, whose term ends in April. While Mushayavanhu’s experience in the local banking industry suggests he might continue with Mangudya’s stabilisation efforts, OMIG highlighted the limitations he will face due to “compromised financial sector confidence and strategic isolation from mainstream international funds.”
Beyond political uncertainties, Zimbabwe faces a significant challenge in its hydropower generation capacity. The Zambezi River Authority recently slashed the 2024 water allocation for Kariba electricity generation from 40 billion cubic meters to a meagre 16 billion cubic meters, citing adverse rainfall forecasts.
This reduction, shared equally with Zambia, threatens Kariba’s current 725 MW output, which accounts for roughly half of Zimbabwe’s total electricity generation. “Alternative power generation is likely to play a significant role against compromised traditional sources,” OMIG warned, emphasising the unquantified but significant impact of this electricity shortfall on overall economic output.
Compounding these concerns, the Zimbabwe Statistics Agency reported a 1,3 percent economic growth in the third quarter of 2023, a 0,6 percent drop compared to the previous quarter.
This deceleration is primarily attributed to a slowdown in the construction sector following a temporary spike in cement prices. While the electricity and manufacturing sectors registered growth, the wholesale and retail sector remained the largest contributor to the economy at 18,3 percent, followed by mining – 14 percent.
