Despite operating in a turbulent economic environment characterized by currency volatility, foreign currency shortages and hyper-inflation as well as an equally disruptive COVID-19 pandemic, a recent study has shown that several of Zimbabwean companies have stood resilient in the past 18 months or so-standing tall amongst Africa’s best performing companies.
Recently, pan African business outlet; African Business Magazine published a list of Africa’s Top 250 companies for 2021 based on businesses ‘market capitalization, the value of all their shares listed for trading on a stock exchange.
Despite South African companies by far featuring prominently among the elites on the continent, Zimbabwe’s top brands which had fallen behind in recent years managed to make a mark.
Annual Inflation reached peak levels at 837.53 percent in July of 2020 and consumer spending weakened as a result but however slowed down following the reintroduction of the American dollar (USD) which brought some stability on the market and revived businesses locally.
At the time of publishing the rate cited by the Reserve Bank of Zimbabwe was around $1=ZWL84 and unofficial rates around $1= ZWL115-125.
This year’s list saw five new entries from Zimbabwe making it into Africa’s top 250 companies to add onto the two (Delta Corporation and Econet Wireless Zimbabwe) that featured prior year.
This year, Delta Corporation- the top Zimbabwe ranked company was at 130 up from 187 in 2020 while Econet Wireless Zimbabwe ranked 131 up from 159 last year.
The new entries are as follows, CBZ (147), Innscor Africa (164), Cassava Smartech (186), Hippo Valley Estates (218) and Simbisa Brands (246).
“The huge climb in share prices on the ZSE has had its impact on the Top Companies rankings, where market capitalization is cited at official foreign exchange rates,” the magazine said.
“CBZ bursts in at #147 on the Top 250 Companies, its market capitalisation up from $42m in 2020 to $570m in 2021. By March, Delta had regained its crown as biggest Zimbabwean company, just ahead of Econet Wireless, at #130 and #131 on the list respectively, but Zimbabwe had several other new entrants that might not be so high with a different USD/ZWL exchange rate.”
The strong performance by Zimbabwean companies is best described by pan-African researcher, African Markets, which rated the Zimbabwe Stock Exchange as the best performing bourse in 2020.
It reported that the ZSE All Share Index went up 1,045.8 percent for investors in Zimbabwean dollars (ZWL) and up 135 percent in US dollars and in the three months to March 2021 it rose 70 percent for ZWL and 65 percent in USD investors.
“Certainty and predictability has been introduced in the economy. The auction is fostering some measure of confidence and trust in the policy making and implementation process,” said the industry lobby body, Confederation for Zimbabwe Industries (CZI) folloiwng the introduction of the foreign currency exchange auction market which assisted firms to raise foreign currency.
There is however uncertainty in the market now, mainly for most local companies since the RBZ introduced its latest Statutory Instrument 127 of 2021 likely to offset gains in foreign currency generation by local companies.
Ironically, the economy has remained under stress and many businesses are on the brink of collapse despite these notable improvements.
Observers noted that the reason why the economy has remained under strain is that the growth has not been inclusive but rather the majority of these big movers are in the food and services sectors which where lesser hit by the COVID-19 restrictions yet Zimbabwe’s economy is heavily reliant on agriculture and mining which did not do too well prior year.
On the brighter side, the just ended agriculture season likely to yield a bumper harvest presents even better potential for growth of local companies and the economy in general.
