Zimbabwe blue chips shine in Africa

AT least five of Zimbabwe's biggest stock exchange-listed firms have made it to the list of Africa's best performing companies, defying storms stemming out of a two year old economic crisis, which was aggravated by the Covid-19 pandemic.

A list of 250 biggest companies released by the London-based pan-African magazine, African Business, ranked financial services giant CBZ Holdings Limited, technology outfit Cassava SmarTech, conglomerate Innscor Africa Limited, Hippo Valley Estates and Delta Corporation among the best performing firms on the continent.

Telecoms giant, Econet Wireless also made it to the big league, whose rankings looked at market capitalisation of the companies as at March 31, 2021.

"Zimbabwe is the regional laggard economically but paradoxically Africa's topperforming stock exchange," African Business said.

"Its economy already contracted by 6% in 2019 because of economic instability and the removal of many subsidies, and poverty was already at 70,5% in 2019 before the pandemic. GDP (gross domestic product) contracted by another 10% in 2020, while inflation averaged 623% in 2020, up from 227% in 2019. That has not stopped rocketing share prices for local investors, who have seen significant gains in 12 months (the best performer was up 12 093% in 2020). The massive gains in market capitalisation at official foreign exchange rates saw many new Zimbabwean companies join the top companies ranking, including finance firm CBZ (#147) and Cassava SmarTech (#186), and consumer firm Hippo Valley Estates (#218)," African Business noted.

The rankings were dominated by southern African countries, which contributed 120 companies, the bulk of them South African firms listed on the Johannesburg Stock Exchange. South African firms occupied the first seven slots on the list, before a Moroccan firm surfaced on the eighth position. But throughout, South African firms, several of them with interests on the Zimbabwean market, cropped up, signifying Johannesburg's growing influence on the continent.

African Business said market capitalisation of South African firms were boosted by the "extraordinary gains" of the Johannesburg Stock Exchange, which surged by between 40% and 55% during the covered period compared to last year.

South Africa was the worst affected by the Covid-19 pandemic.

But the South African government responded by pumping in up to 10,4% of the country's GDP into stimulus packages to prop up the economy.

On the other hand, Zimbabwe was already battling to address a serious crisis before the virus tore through the region in March last year, leaving a trail of destruction.

Foreign currency shortages, growing inflationary pressures and exchange rate fragilities have been among the biggest hurdles to an economic rebound.

Government projects the economy to grow by 7,8% this year.

However, most of these headwinds have not yet been addressed, with firms owed up to US$200 million in allotted funds on the foreign currency auction system.

The exchange rate has been running amok on the black market lately, with the Zimbabwe dollar struggling to protect its turf.

Like South Africa, Zimbabwe's broke government announced a ZW$18 billion bailout package last year.

But the majority of big firms have said they never received any injections from the bailout.