ZIMBABWE, in the throes of its worst political and economic crisis in more than a decade, has the highest country risk in the whole of Southern Africa, a report has revealed.
Tinashe Kairiza/Kudzai Kuwaza
The country is considered more risky than neighbouring Mozambique which is battling to contain a crippling insurgency that has so far claimed over 1 000 lives.
Zimbabwe finds itself in a deepening economic crisis characterised by a debilitating liquidity crunch, acute shortages of fuel and foreign currency, widespread company closures, dwindling investment inflows and runaway inflation which has surpassed the 800% mark, decimating pensions and incomes.
The Southern African country is not faring any better politically, with the recent arrests of opposition leader Jacob Ngarivhume and journalist Hopewell Chin’ono as the intractable political deadlock between President Emmerson Mnangagwa and opposition leader Nelson Chamisa continues. Mnangagwa narrowly won the heavily disputed 2018 elections by a wafer-thin 50,6%.
His contentious victory was upheld by the Constitutional Court.According to Fitch Solutions’ Africa Monitor report of July, which assesses short-term and long-term political stability, economic outlook and operational barriers to doing business, Zimbabwe ranks the lowest among nine rated countries in the region.
In the assessment in which countries are scored between zero and 100 and where a higher score points to a lower risk while a lower score indicates higher risk, Zimbabwe scored the lowest in all categories.
On the short-term political index, Zimbabwe scored a paltry 38,5% against the regional average of 60,7% with Mauritius considered the most stable country, scoring 76,7%. Mozambique, plagued by an insurgency that has major implications for the region, scored better than Zimbabwe, recording 53,8%.
Under the short-term economic rubric, Zimbabwe, which recently suspended trading on the local bourse, in a move that unnerved investors, and is in the process of grabbing productive farms from white farmers and perceived political foes, scored a miserable 26,5%. In comparison, strife-torn Mozambique fared better, scoring 32,3%.
Under the long-term political benchmark, Zimbabwe, which is due to hold elections in 2023 scored a measly 43,8% against the regional average of 58,3%.
In the long-term economic index, the country, mired in an acute currency volatility crisis, fares poorly with just 23,5% against an average of 42,7%.
Under the operational risk index — which assesses the ease of doing business, Zimbabwe recorded foreign direct investment (FDI) inflows of US$259 million last year, plummeting from US$717,1 million in 2018 and is expected to nosedive to US$150 million this year — scored 32,5%. The regional average was 42,8%.
Overall, Zimbabwe ranks the lowest on the country risk scale, posting 32,9% against the regional average of 47,6%.
The rankings by Fitch correspond with what was written by Finance minister Mthuli Ncube in leaked correspondence this year to international financial institutions (IFIs).
In his letter begging for a US$200 million rescue package, Ncube painted a grim picture of the country’s economic situation, projecting a gross domestic product (GDP) decline of 20% with catastrophic national and regional ramifications. He was, however, rebuffed, with the IFIs demanding the implementation of substantive political and economic reforms.
Mnangagwa’s administration has come under constant criticism from Western countries over a plethora of issues ranging from property rights violations, corruption, abductions and brutal attacks and arrests of opposition and civil society activists as well as failing to rein in soldiers who are responsible for the death of more than 20 individuals.
Zimbabwe, shunned by multilateral lenders for failing to service an US$8 billion external debt, has failed to meet the requirements of the International Monetary Fund (IMF) Staff-Monitored Programme (SMP). The SMP is a crucial gauge for the country’s commitment to reform.