Former Finance Minister Tendai Biti has issued a stark warning of an impending economic crisis in Zimbabwe, predicting a “bloodbath” for businesses in 2025 unless the government implements significant reforms.
His dire prediction comes amidst a persistent liquidity crunch, volatile exchange rates, and a growing wave of business closures and corporate rescues.
“Companies are paying the price of an uncertain political regime and exchange rate mismanagement. The introduction of the ZiG [Zimbabwe Gold] currency has only brought chaos to the economy,” he stated in an interview with NewsDay Business.
He further warned of a complete collapse in aggregate demand, citing punitive debt charges and severely limited access to affordable capital as key factors strangling businesses. “It’s going to be a bloodbath for businesses in 2025,” he added, emphasizing the urgency of the situation.
Biti’s proposed solutions centre on injecting much-needed liquidity into the economy. “To prevent further decline, the economy must be liquid. There must be cheap money in the market to allow access to funding and ensure businesses survive,” he explained.
He also strongly criticised the current export surrender requirements, arguing that they exacerbate the foreign currency shortage.
“Export surrender requirements are an additional threat to business. Removing them would ensure a huge chunk of foreign currency is available in the market,” he said, referring to the policy mandating exporters to surrender 25% of their foreign currency earnings at the prevailing interbank exchange rate.
He further called for the abolition of money transfer fees, stating that these fees are “choking businesses and making it impossible for them to operate efficiently.”
Beyond the economic policies, Biti also highlighted the significant role of political uncertainty in worsening the economic climate. He expressed deep concern over the ongoing debate surrounding President Emmerson Mnangagwa’s potential bid for a third term, exceeding the constitutionally mandated two terms ending in 2028.
“The uncertainty created by Mnangagwa’s third-term ambitions and the removal of key officials is discouraging investment and deepening the crisis. Such moves create suspicion and erode trust in governance,” he asserted, referencing the recent appointments of new heads for the police and intelligence agency.
This political instability, he argues, is driving businesses to relocate to neighbouring countries like South Africa, while simultaneously deterring foreign investment.
The severity of the situation is further underscored by economist Chenaimoyo Mutambasere, who paints a bleak picture of the country’s financial standing. She noted that the 2025 budget requires US$38 billion to address the nation’s needs, yet both government revenue and expenditure are currently pegged at a mere US$7 billion.
“With 60% of the population already living in extreme poverty, the situation is dire. The country needs a miracle to recover,” she commented, highlighting the immense gap between the country’s needs and its available resources.
The consequences of the ongoing economic crisis are already evident. Over the past year, several prominent companies have either shut down, drastically downsized, or sought corporate rescue, including Beta Bricks, Khayah Cement, and Truworths.
These high-profile cases serve as stark illustrations of the widespread struggle faced by businesses operating within the current economic environment. Biti’s dire warning, coupled with Mutambasere’s assessment, paints a grim picture for Zimbabwe’s economic future, emphasizing the critical need for immediate and substantial policy changes to avert a potentially catastrophic collapse.
