Last reviewed 13 October 2021

Once southern Africa’s flagship economy, Zimbabwe is making a fresh start in the post-Mugabe era as it rekindles ties with international partners.

Destination Zimbabwe

Zimbabwe, a landlocked country in southern Africa, is carving out a new chapter in its history following the fall of long-standing president Robert Mugabe who had dominated the nation’s political scene since independence from Britain in 1980.

Mugabe, who died in 2019, served as president for 30 years until he was eventually ousted in 2017, resigning his position in the wake of a military coup. Prior to his presidency, he served as prime minister from independence through to 1987. Mugabe’s departure opened up new possibilities, freeing the country’s politics and media from his grasp, though many deep and ingrained challenges still remain.

Once dubbed the breadbasket of the southern African region, Zimbabwe remains poor and prone to severe droughts and food shortages, while its 15 million people have had to navigate hyperinflation with rates topping 1000% in the mid-2000s. This, in part, was the result of controversial land reforms that saw white-owned farms redistributed to landless Zimbabweans, a move which brought with it sharp falls in output. Major export commodities include tobacco and horticulture, among other crops.

The measures also cut off access to international finance with most western donors and multilateral agencies, including the World Bank and the International Monetary Fund (IMF), slashing aid because of the land seizure programme. Despite the change of leadership, the legacy of Mugabe’s rule is still evident today.

Former vice-president Emmerson Mnangagwa, elected in 2017, is working to stabilise the economy and is keen to nurture more foreign investment, yet some decisive steps have not always proved popular. When the Government more than doubled fuel prices in an attempt to tackle shortages and a thriving black market, it triggered protests in Harare, the capital, and other cities.

But dealing with such issues will be vital if Zimbabwe is to make a comeback as one of southern Africa’s most successful economies.

Bilateral relations

Despite any challenges posed during the Mugabe era, Zimbabwe is nonetheless a market that will be familiar and welcoming for UK exporters, given the long historical connections between the two countries. English is widely spoken and there are further strong links through institutions, families, history and culture, including a shared passion for cricket and football; in the other direction, many Zimbabweans also now live and work in the UK.

There is also established investment from a number of major UK-based corporations such as Anglo American, Unilever and Standard Chartered Bank.

While a challenging market for new exporters, the UK’s Department for International Trade sees good opportunities in areas ranging from energy and mining through to agriculture and tourism.

One UK-listed company that is very active in Zimbabwe currently is Caledonia Mining. The gold producer, which owns the Blanket Mine, is keen to grow and diversify its local business and by 2022 the company plans to increase its annual production to 80,000 ounces.

It recently entered into an agreement to acquire the mining claims over a new area, Maligreen, in the Gweru mining district, for a fee of US$4 million. Steve Curtis, Caledonia Mining’s chief executive, called the area “one of the more significant exploration opportunities in Zimbabwe”. He also refers to Zimbabwe as “one of the last gold frontiers in Africa”.

Overall bilateral trade with the UK is modest but steady, spanning areas including cars and other road vehicles, electrical goods, office machinery and scientific instruments. Total two-way trade in goods and services was £177 million (US$241 million) in the four quarters to the end of Q1 2021.

This represents a decrease of 26.2% or £63 million (US$86 million) over the same period a year previously, though at least part of this fall is down to overall reductions in international trade amid the Covid-19 outbreak.

In 2017 and 2018, however, bilateral trade surpassed £400 million (US$544 million) each year, so there is clearly scope to expand business links further. Top imports from Zimbabwe into the UK include predominantly food and drink produce, notably fruits and vegetables, as well as tea, coffee and cocoa.

Growth potential

But the challenges facing Zimbabwe’s economy and its people remain very real and urgent. Real gross domestic product (GDP) contracted by 4% in 2020, after a 6% decline in 2019, according to the IMF. The pandemic, on top of a devastating cyclone in 2019, and protracted drought, have all taken their toll on the overall economic and humanitarian situation.

The IMF predicts that growth will reach 3.1% during 2021 on the back of a bumper agricultural output, increased energy production, and the resumption of broader manufacturing and construction activities.

Yet clearly, Zimbabwe is a country of far greater potential than its current economic plight might suggest, with significant scope for longer-term trade and investment. It has a youthful population, with around three-quarters of citizens under the age of 35 and ranks highly in Africa for its skills base.

Despite its landlocked position, the country is a gateway for southern African logistics, roads, rail, power and telecommunications, which means it can be a strategic location for UK firms to expand exports into the wider region. Although a developing country itself, Zimbabwe’s infrastructure is also reasonably advanced compared to many peer states.

It is also a member of key regional trade groups such as the Common Market for Eastern and Southern Africa (Comesa), which provides access to a larger pool of 583 million people.

It now supports a dynamic intra-regional trade system, although this was dampened last year with an estimated US$905 million worth of exports lost due to the various response measures that member states applied to mitigate the Covid-19 pandemic. It has prompted calls to accelerate the digitisation of trade protocols across the region to mitigate future losses, covering areas such as customs procedures and electronic cargo tracking.

Zimbabwe is also a member of many other regional groupings, including the Southern African Power Pool (SAPP), an electricity interconnection project linking the countries of the region, with Harare serving as the headquarters.

Infrastructure investment

There are also moves to further improve infrastructure as a way to revive Zimbabwe’s economy. Flagship projects include a US$300 million scheme to modernise the country’s most important border crossing points with South Africa.

Zimborders, a private company, has a 17.5-year concession to rebuild and refresh the main border post close to the town of Beitbridge. The project is expected to boost business and tourism and fast track freight; currently, some truck companies take detours of up to 300km to avoid the Beitbridge bottleneck where waits of up to 36 hours are not uncommon.

It has attracted extensive funding from the Emerging Africa Infrastructure Fund, among others, reflecting an uptick in sentiment toward Zimbabwe after the Mugabe era.

Like other southern African countries, Zimbabwe’s energy sector is also grappling with the transition to cleaner technologies at the same time as seeking to ramp up overall production and coverage. However, this transition has disrupted some major investment plans, with the Industrial and Commercial Bank of China reported to have dropped plans to fund a major coal-fired power plant.

The involvement of China’s biggest bank in the US$3 billion Sengwa project, which would generate 2800 megawatts (MW) of electricity, also highlights the growing diversity of Zimbabwe’s trade partners. The Chinese bank is reported to have concerns about the environmental impact of the scheme, which would tap into coal deposits located between Harare and Bulawayo.

One of the companies behind the Sengwa project is RioZim, which was separated from UK-listed mining giant Rio Tinto plc in 2004, to become a wholly owned Zimbabwean company that produces coal, gold and refines copper and nickel.

Like other nations around the world, Zimbabwe has set its own climate change targets, seeking to reduce greenhouse gas emissions by 40% by 2030. Mitigation measures include expanding solar power capacity, adding additional power generating capacity through microgrids, and creating 500,000 more hectares of forest land by 2025.

At the same time, however, it is separately committed to increasing electricity and coal supply to the iron and steel sectors.

The strategy to manage this environmental challenge may well dovetail into how Zimbabwe develops its high potential tourism sector, which remains hugely under-developed despite the country’s abundance of natural attractions. These range from the mighty Victoria Falls — one of the true natural wonders of the world — to its incredible, diverse wildlife. The country’s national parks, which include Hwange, Matobo and Mana Pools, among others, are home to the Big Five (leopard, lion, rhino, elephant and buffalo) and draw visitors from across the globe.