Zim declares COVID-19 a national disaster

In a recent development, Zimbabwe has declared COVID-19 a national disaster, further exacerbating the economic challenges the country is facing. The suspension of the transfer of local shares in dual-listed companies to foreign bourses for the next 12 months has raised concerns about foreign exchange issues. Joining CNBC Africa to discuss these developments is Batanai Matsika, Head of Research at Morgan & Co. Matsika highlighted the impact of COVID-19 on Zimbabwe's economy, particularly on the country's export revenue. With a heavy reliance on agricultural produce such as tobacco and gold, any disruptions in exports could pose significant risks. Additionally, the government's readiness to handle the pandemic is under scrutiny, given the country's existing financial constraints and deficits. The fragile state of Zimbabwe's health system adds another layer of concern. With limited resources allocated to capital expenditure, essential infrastructure like hospitals and medical supplies are in suboptimal condition. Without adequate external support or donor funding, Zimbabwe may struggle to effectively combat the spread of COVID-19. Turning to the recent decision to suspend the transfer of local shares in dual-listed companies to foreign bourses, Matsika explained the background behind the move. The government's concern over parallel market exchange rates led to the decision to restrict trading of shares in companies like Old Mutual Limited and PPC for 90 days. The subsequent suspension of fungibility for these companies further restricts foreign investors from participating in the local market, potentially deterring much-needed foreign direct investment. This move comes at a time when Zimbabwe is trying to position itself as 'open for business' to attract FDI. However, such restrictions on foreign investment could send mixed signals to the global market and impede the country's economic recovery efforts. As Zimbabwe grapples with both the health and economic impacts of COVID-19, policymakers will need to strike a delicate balance between addressing immediate health crisis and ensuring sustainable economic growth. The declaration of COVID-19 as a national disaster further underscores the urgency of coordinated efforts to mitigate the challenges facing the country.