How executives can manage for value-creation in Zimbabwe’s emerging economic era

By RABIRO MANGENA
In a previous article, I explored the importance of carrying out a business valuation when shareholders are contemplating transactions that involve sale and purchase of companies.
That discussion was meant to answer an important question: What is a business worth today?
But in Zimbabwe’s rapidly evolving economic landscape, a more fundamental question has emerged: How is that value actually created?

The context
For the past two or so decades, corporate strategy in Zimbabwe was about survival. Performance was less about growth and more about resilience, which meant preserving margins, managing currency exposure, and navigating operational instability. That phase, however, is receding.

Over the past 18 months, Zimbabwe has experienced a meaningful stabilisation of its macroeconomic fundamentals. Inflation has anchored itself at single-digit levels of around 4%. Foreign exchange earnings rose to above US$16 billion in 2025. In the first five months of 2026, foreign currency earnings increased by over 39% to US$8.3 billion. At the same time, the country has managed to record a sustained current account surplus position. Combined with the Reserve Bank of Zimbabwe’s hawkish monetary stance, this has led to a stabilisation of the exchange rate.

There are also early signs of declining country risk. Zimbabwe’s risk premium has edged down to approximately 11.7% from levels above 12%. This small but important shift signals improving investor perceptions and a gradual reduction in the cost of capital.

Zimbabwe’s industrial base is also showing signs of a rebound. According to the Confederation of Zimbabwe Industries (“CZI”), capacity utilization has climbed to 55.9%, industrial output is up by 13%, turnovers have advanced by 12%, and employment has grown by 6%.

Yet beneath these encouraging indicators lies a structural constraint. The very monetary policies that have successfully tamed inflation have also compressed aggregate local demand. Liquidity in the local currency remains tight, and consumer spending is heavily dependent on foreign currency flows, factors that are not fully controllable by domestic policy. Borrowing costs are still too high.
The above presents a paradox, where Zimbabwe now presents a seemingly stable, but highly competitive and capacity-constrained domestic market. Executives are no longer competing in a collapsing economy, but they are competing intensely for a relatively tight market pool.

To win in this emerging era, executives could consider pivoting towards the strategic imperatives which I discuss below.

1. Defining strategy and competitive advantage
In a low-inflation environment, real value is created when a company defines a clear, long-term strategic direction and builds an unassailable competitive advantage. Executives must transition from short-term tactical pivoting to robust strategic positioning. This requires identifying what makes the company uniquely defensible, whether through proprietary technology, superior cost leadership, brand equity, or deeper distribution networks.

2. Innovation and business model design
During the peak of Zimbabwe’s economic problems, business model design was often relegated to the periphery. When the macroeconomy is fundamentally broken, the most brilliant business model can still fail due to external shocks, forcing companies into purely reactive stances. Today, business model design must take centre stage as a primary engine of value creation. This requires innovating building models around value propositions, rethinking monetisation strategies, and digitising engagement channels.

3. Unlocking scale and mastering import substitution
While a capacity utilization rate of 55.9% represents a strong recovery, it also implies that nearly half of Zimbabwe’s industrial capacity remains idle. In a stable environment, idle capacity is a punishing drag on value because it inflates unit costs and erodes competitiveness.

This idle capacity also represents an opportunity for value creation through import substitution. According to the CZI, over 54% of the raw materials used by local industry are still being imported. By aggressively targeting the localisation of these supply chains, companies can simultaneously satisfy the existing domestic market and absorb their unutilised capacity. This could unlock economies of scale, enhance margins, and build a defensible competitive advantage.

4. Tightening internal controls and optimizing systems
During the hyper-volatile era, corporate systems and internal processes were frequently sidelined. Executives were understandably preoccupied with firefighting external macro shocks, leaving little room to audit internal workflows. In a stable environment, when inflation is no longer masking operational inefficiencies, profitability depends entirely on cost and human resource efficiencies.

The other harsh reality is that many Zimbabwean companies are currently bleeding cash due to weak internal controls, obsolete legacy systems, and inadequate oversight. Value creation now requires an urgent, inward-looking review of corporate governance. Designing and enforcing systems that are truly “fit for purpose” ensures that revenues actually reach the bottom line instead of leaking through fraud and inefficiency.

5. Retooling and building of fixed capital
Forward-thinking firms must invest in;
• Re-tooling and modernization of aged plant and equipment.
• Automation and digital integration across shop floors and back offices.
• Technological upgrades that optimize supply chains.
Admittedly, capital is not just inadequate but still expensive, especially if a company wanted to borrow in the local currency. That said, executives cannot afford to ignore this important fundamental, otherwise, the company’s future capacity will be constrained.

7. Transitioning to regional markets
Once a company has optimized its internal processes and stabilized its domestic market share, the final frontier for value creation is regional expansion. By leveraging opportunities under the African Continental Free Trade Area (AfCFTA), Zimbabwean firms can look beyond our borders. Transitioning to an export-led model fundamentally enhances a company’s valuation multiple by diversifying currency exposure, expanding the addressable market, and insulating the business from domestic demand cycles.

Conclusion: The executive mandate
Zimbabwe could be entering a new economic phase defined by low and stable inflation, strong foreign currency inflows, and a steadily improving country risk perception. But these macroeconomic conditions do not, on their own, create corporate value, they merely provide the stage. Value must now be earned through flawless execution. The firms that will command premium valuations tomorrow will not simply be those that survived the volatility of the past, but those that design winning business models, optimize internal systems, and build a disciplined strategic framework designed to win in a stable future.

DISCLAIMER
This article was contributed by Rabiro Mangena, in his own capacity. Rabiro is a Director of Advisory at BDO Zimbabwe. He is a corporate finance expert who consults on M&A, commercial and financial due diligence reviews, business valuations, project finance, restructurings and corporate rescue. He is a holder of an MSc in Finance & Investments (NUST), a certificate in Mineral Resource Valuation (Zimbabwe School of Mines), a certificate in Financial Modelling (SADC DFRC), post-graduate Diploma in Applied Accountancy, as well as a Bachelor of Accountancy Honours (UZ). He has over 28 years of experience that span external audit and assurance, risk management, and financial and business advisory. He has consulted on companies across various sectors that include mining, telecommunications, retail, manufacturing, agriculture, aviation, tourism, among other sectors.