Africa-Press – Zimbabwe. Zimbabwe’s economic stability could be short-lived if underlying structural weaknesses are not addressed, it has been revealed.
This was highlighted by local economist Carren Pindiriri at the ongoing Southern Africa Insurance Indaba in Victoria Falls, organised by the Insurance Institute of Zimbabwe.
Pindiriri, who was presenting on the economic and business outlook, said that while the economy was showing signs of renewed stability, the foundation remained fragile, posing significant risks for the country’s insurance sector.
He said the economy was “performing well” on the back of strong agricultural output, firm gold prices, and improved macroeconomic stability.
“Growth is projected at 6% in 2025, while month-on-month inflation slowed to 0.2% in October and ZiG inflation fell to -0.4%. The local currency has also remained relatively steady, with the ZiG trading at about ZiG25.60 to the US dollar, marginally stronger than its May level. Foreign currency receipts reached US$9.2 billion by October, reflecting increased inflows into the economy,” he said.
“We have seen some stability, but there are a number of challenges that need to be addressed if we are to sustain it. Price and exchange rate instability are negatively related to the demand for insurance because high inflation increases premium prices and reduces demand. High inflation and a depreciating currency discourage people from buying insurance because of the expected claim values.”
He said that if the stability of the Zimbabwean currency and exchange rate were sustained, insurance demand would likely rise.
He added that high informality (76.1%) was a major challenge, effectively functioning as an independent economy due to the billions of United States dollars circulating within it.
Pindiriri said that at a time when Zimbabwe’s public debt has surpassed US$23 billion and arrears continue to rise, concerns about the sustainability of the current stability were growing.
“Elevated fiscal risks remain a major concern,” he said, adding that the country’s 76.1% informality rate was further complicating economic planning and undermining the tax base.
He also warned that any sharp policy shifts or increases in government expenditure could destabilise the currency and trigger fresh inflationary pressures.
The economist told delegates that the insurance sector — now the fourth-largest contributor to national income — was highly sensitive to macroeconomic shifts.
He noted that insurance uptake collapsed during the 2002–2008 instability period and could fall again if confidence is lost.
“If the currency is not stable, people will not demand insurance. Stability is critical,” Pindiriri said.
He added that while businesses have expressed optimism for 2026, their outlook depends on continued exchange-rate and price stability, as well as progress on clearing government arrears.
Consequently, Pindiriri outlined several risks facing the industry, including future currency volatility, inflation resurgence, and the erosion of long-term policy value.
“We need to strengthen currency-hedging strategies, introduce inflation-linked products, and match assets to liabilities to protect clients from exchange-rate shocks,” he said.
“The growing informal economy also presents a major challenge, with low insurance uptake, reduced employer-sponsored cover, and shrinking disposable incomes.”
He said insurers must expand microinsurance offerings, partner with community organisations, and adopt digital distribution models to reach the informal sector.
Despite the risks, Pindiriri said opportunities were emerging, driven by digital innovation, regional integration, and shifting consumer needs.
He cited the rise of mobile-based insurance, demand for USD-indexed products, and prospects linked to the African Continental Free Trade Area as areas with strong growth potential.
Falling global inflation and steady regional growth — forecast at around 4% for Sub-Saharan Africa — are also expected to support industry expansion.
Pindiriri concluded that the outlook for Zimbabwe’s insurance sector depends squarely on the country’s ability to maintain macroeconomic stability.
“If stability is sustained, insurance demand is likely to rise,” he said.
“But if instability returns, the sector will suffer. Real income growth and confidence are what ultimately drive this market.”
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