Old Mutual CEO sees ‘green shoots’ in Zimbabwe economy, but currency uncertainty still weighs

A few good signs: Sam Matsekete, Old Mutual CEO

The head of Old Mutual Zimbabwe says there are green shoots appearing in the economy after the devastation of a severe drought and the coronavirus pandemic.

“There are good signs emerging in economic sub-sectors such as agriculture, mining, horticulture and energy, where there are actual investments taking place,” Sam Matsekete, the chief executive officer of Old Mutual Zimbabwe Limited said in an interview in the capital, Harare, on Friday.

A “fairly stable” operating environment for businesses began in the second half of last year and held into the final quarter, a time usually associated with a liquidity squeeze as demand for foreign currency rises, Matsekete said. Projections for agricultural output suggest dollar shortages could ease, helping sustain stability this year, he said.

Old Mutual is the country’s biggest insurer and one of the largest portfolio investors and holders of property in Zimbabwe.

Annual inflation in Zimbabwe rose in January to 362.6%, the first increase in six months. The country has been hard hit by the coronavirus, with three Cabinet ministers succumbing to the virus. A strict lockdown imposed on January 5 has been extended twice by President Emmerson Mnangagwa and will be maintained until March 1 with curbs on business operating hours and a night-time curfew.

The primary concern for foreign investors has been uncertainty over whether the country had dollarised its economy. While foreign currencies including the US dollar can be used in local transactions, the central bank has ruled out returning to the greenback as its default currency after reinstating the Zimbabwean dollar in 2019 as the sole legal tender.

Meanwhile, a dollar shortage is putting operations of many businesses, including miners who account for half of Zimbabwe’s foreign earnings, at risk.

“People have been looking at policies and at the currency issue very closely,” Matsekete said. “They are asking are we dollarised or de-dollarising?”

Old Mutual has bought 27 hectares at Ngezi, anticipating growth in the mining area. The company will build an industrial park and a hospital near Turf Village in Ngezi to serve the growing community. The area is expecting growth due to planned expansion by Zimplats, a new platinum mine being developed by Karo Resources and other mining investments.

Matsekete’s optimism is despite regulatory hurdles the company faced in 2020, when it was suspended from the Zimbabwe Stock Exchange, accused of being a conduit for currency manipulators. Authorities later said Old Mutual played no role in the currency crisis.


Bloomberg/additional reporting by newZWire