Afreximbank predicts steady growth for Zimbabwe

Tapiwanashe Mangwiro, Senior Business Reporter

INTERNATIONAL Financial Institution, Afreximbank, forecasts a 3,8 percent economic growth for Zimbabwe in 2025 and steady growth over the next several years, according to its latest African Trade and Economic Outlook report.

The pan-African financier projects Zimbabwe’s annual growth at 3,8 percent in 2025, with rates of 3 percent in 2024, 3,3 percent in 2026, and 3,6 percent in 2027.

“Despite global shocks, a favourable agricultural season, expansion in mining activities and stable economic conditions will spur growth in Zimbabwe,” the bank noted.

Such a forecast places Zimbabwe amongst the fastest-growing economies on the continent, emerging as a key beneficiary of intra-African trade.

These projections are in line with predictions from several international financial institutions. The International Monetary Fund, World Bank, and African Development Bank have also signalled robust recovery prospects for Zimbabwe.

While the AfDB anticipates a growth rate of 5,3 percent in 2025, the Ministry of Finance, Economic Development and Investment Promotion, which initially forecast 6 percent growth, has hinted at a possible review of forecasts, a revision that could be triggered by the performance of key sectors in the first quarter of the year.

An economist familiar with regional trends, Dr Tendai Chikwanha, said: “The convergence of these positive indicators from multiple IFIs reinforces Zimbabwe’s potential. However, the ministry’s caution about reviewing forecasts suggests that sectoral performance in the short term remains a critical variable.”

Moving deeper into the country’s macroeconomic environment, Afreximbank’s report also highlights significant improvements in other key metrics.

The recent period has witnessed pronounced disinflationary trends across Central, Eastern and Southern Africa. Locally, the effect has been particularly notable, with inflation experiencing a marked decline that aligns with the broader regional trend, a fall from levels seen in previous years.

Regional inflation is projected to decrease from 20,1 percent in 2024 to 18,8 percent in 2025, then further dipping to 15,7 percent in 2026, and stabilising at 14,7 percent by 2027.

Within this scenario, Zimbabwe is set for an impressive contraction of approximately 32,2 percentage points over the forecast horizon, reflecting effective inflation control measures.

Fiscal consolidation is another bright spot, with the continent expecting its average fiscal deficit to narrow from 5,8 percent of GDP in 2024 to 4 percent by 2027.

Zimbabwe, alongside Malawi, Mozambique, Zambia and South Africa, is anticipated to implement stringent measures that will gradually improve fiscal health, albeit with differences in magnitude.

Debt-to-GDP ratios in Southern Africa are similarly trending downwards, as exemplified by the country’s expected debt reduction by 8,3 percentage points over the forecast period.

“These fiscal and monetary adjustments are critical for maintaining investor confidence and sustaining the growth momentum,” said Dr Chikwanha.

“The comprehensive policy stance, including targeted fiscal measures and improved monetary discipline, positions Zimbabwe favourably for medium-term economic recovery, notwithstanding potential external headwinds.”

In a separate but equally impactful development, Afreximbank announced a substantial dividend declaration following its stellar financial performance over the past year.

The bank reported a profit of US$973,53 million in the fiscal year ending December 31, 2024, marking a significant jump from US$756,1 million in the previous period. With robust increases in net interest income and net fee and commission income, up by 25,4 percent and 32,45 percent respectively, the bank’s performance has far exceeded market expectations.

“Due to the higher net income achieved during the year under review and in line with historical trends, Directors recommended a dividend payout of US$300 million, up from US$264,6 million in 2023, to shareholders, representing a payout ratio of 31 percent,” Afreximbank stated in its financial results announcement.

Zimbabwe, notably, stands as the bank’s fifth-largest shareholder with a stake of 5,71 percent. This dividend decision not only affirms Afreximbank’s financial resilience but also provides Zimbabwe with a tangible return on its equity position, an encouraging sign for local investors and policymakers alike.

Mr Raymond Madziva, a prominent banker, said: “The dividend declaration underscores not only the bank’s strong performance but also its commitment to rewarding shareholders. For Zimbabwe, this translates into a boosted investor sentiment and a potentially positive multiplier effect in the broader economy.”

Overall, the multifaceted outlook for Zimbabwe, as painted by Afreximbank and echoed by other leading IFIs, signals a cautiously optimistic future. The forecast growth is anchored in favourable conditions within key sectors such as agriculture and mining, while positive trends in inflation control and fiscal consolidation add to the narrative of resilience.

Concurrently, strategic dividend payouts by major financial institutions like Afreximbank further enhance the country’s financial landscape, demonstrating the tangible benefits of robust performance in the regional banking sector.

As experts like Dr Chikwanha and Mr Madziva emphasise, the composite view of steady growth, improved macroeconomic stability, and rewarding dividends points to a brighter financial future for the nation.