LIVINGSTONE MARUFU
Zimbabwe companies should be “nimble” enough to survive the unprecedented upheavals brought by the Covid-19 pandemic, a research firm has warned.
In its latest report, Morgan& Co said local companies should be aggressive in marketing their products digitally to survive the Covid-19 storm.
“Companies need to adopt equity strategies for the companies to perform well in 2021. A key highlight is that businesses operating in Zimbabwe will have to be nimble enough and maintain enough liquidity to survive periods of low sales of 2021,” part of the new report reads.
Overall, the report said the Covid-19 pandemic presented headwinds, which significantly affected disposable incomes.
Some of the companies which are likely to suffer include hospitality outfits and retailers, according to Morgan & Co.
The report said tourism was likely to remain in the doldrums.
The report, however, identified agriculture, mining and financial institutions that may do well in 2021.
The Zimbabwe economy is largely dependent on the agriculture sector. It is expected that the agriculture sector will recover by 11.3% this year owing to the good rains that have been experienced in the country this season.
The report said the emergence of Covid-19 has created high demand for food hence agriculture related companies are expected to perform well this year.
“We view Seed Co International as a vehicle of gaining exposure in the food demand growth story in Sub Saharan Africa and other companies to watch in the sector include Hippo Valley, Padenga and Ariston,” the report said.
Government has also identified mining as a key sector in the recovery of Zimbabwe’s economy. Government expects the mining sector to contribute 8% to the Gross Domestic Product
The sector is expected to recover by 11% this year.
Zimbabwe has one of the largest platinum, diamond, gold and coal reserves in the world. But, high technology, together with huge capital investments, is required to extract the precious minerals.
Commodity prices are expected to firm 5% in 2021 alongside the expected rebound in global demand.
Gold prices have also been on an upward trend given the safe haven status of the yellow metal.
Nickel is likely to perform well in 2021 given high demand for the metal in China’s economy hence the mining groups such as Bindura Nickel Corporation are expected to experience growth in 2021.
Companies such as RioZim and Padenga are expected to do well on the stock exchange this year, the report said.
The country’s financial sector is expected to grow by 7.2% in 2021 and this could present opportunities for investors in 2021.
There has been a major reorganisation of the banking sector recently.
State-owned pension fund, the National Social Security (NSSA) is disposing of its shareholding in ZB and increasing its stake in CBZ.
NSSA is disposing of its stake in First Mutual and redirecting the proceeds to foreign dominated assets and other impact investments such as housing.
There are more transactional activities expected in 2021 that are likely going to shake the market and change the landscape of the banking sector in Zimbabwe this year.
“We opine there is scope for consolidations in the space. CBZ, ZB and FMHL are some of the companies that are expected to perform,” Morgan& Co said.
