Zimbabwe's economy has been on a downward spiral for decades.Thanks to a scarcity of foreign currency the country has faced one economic crisis after another – a situation only worsened by the Covid-19 pandemic.Euphoria and hope following a coup in 2017 that ended the reign of long-time ruler Robert Mugabe was short-lived, despite pledges by the new government led by President Emmerson Mnangagwa to revive the economy and mend ties with former trading partners around the world.African project expert and analyst Duncan Bonnett of Africa House says politically not much has changed in the country.“There has not been much political liberalisation. If anything it has regressed after the initial euphoria experienced post Mugabe. The economy remains under severe pressure which has been made worse by Cov id-19.”In 2019, Zimbabwe was also hit by a severe drought followed by Cyclone Idai. This wreaked further havoc on the country and its struggling economy.“The drought and cyclone, coupled with shortages of foreign currency, have led to double-digit contraction of agriculture, electricity, and water production and pushed more than half of the population into food insecurity,” reads a report by the World Bank. “Policy missteps, lack of effective fiscal-monetary-forex policy coordination and significant quasi-fiscal activities by the Central Bank have undermined the de-dollarisation efforts and resulted in a rapid depreciation of the local currency and high inf lationary pressures.”External factors continue to place added pressure on the already strained economy. According to economists at NKC African Economics, Zimbabwe once again faces a period of extreme macroeconomic instability as political fragilities have seen the economy come undone again. Inf lation is running rampant, they say, while the local currency struggles to gain traction, and almost the entire country is out of formal employment.“Zimbabwe is facing some severe economic headwinds,” says Bonnett, indicating that hope of major improvement in Zimbabwe’s economic and fiscal challenges this year remains low.“There are, however, pockets of good news. Cement companies are increasing production lines in the country, and this typically does not happen if there is no demand – and cement is a bellwether for construction.”Movement is also being seen in the mining sector with the development of several platinum mines in the country. “In the mining sector, in general, there is still activity taking place and several projects are ongoing. There are also some interesting projects outside of mining worth watching, particularly in the power sector.”He says this includes the Batoka Gorge Hydroelectric Power Station development which is said to now have the necessary funding. “It is open to debate whether this is true, but overall there is action in the power sector. Particularly the mines are moving towards generating their own electricity, and the shift to independent power producing is happening.”In the road sector, Bonnett says the Harare-Nyamapanda road project is being touted again and there is talk of a solar plant going up in the country.“One of the major difficulties in Zimbabwe remains the ability to differentiate between rhetoric and reality,” he adds.
