Victoria Ruzvidzo Business Focus
In an unfamiliar fashion that could mark the beginning of a new season, the Government last week revised this year’s economic growth figure to 3,7 percent from 1,7 percent stated in the 2017 National Budget.
This is also close to the 3,8 percent predicted by the World Bank.
For the past few years and prior dollarisation, growth targets were often revised downwards as the reality and intensity of economic challenges dictated the pace. It was not unusual for the Minister of Finance to reduce by half or even more, earlier economic targets.
But the story is now different. Finance Minister Patrick Chinamasa came out boldly last Thursday as he addressed military officers to say that a 3,7 percent growth figure was no longer wishful thinking but would actually be achieved. I tend to agree with him.
Of course we know the good minister was not intimidated by the presence of the military and had to say something to impress them (icho!) and indeed he was not shooting in the dark either. The economy is ripe for such growth figures and Minister Chinamasa knows what he was saying without doubt.
In fact this economy can even do a double-digit growth in any year if we really put our minds to it. It happened in 2011 and 2012 so the precedence is on my side. No wonder Minister Chinamasa, whom we have really known to always say it straight up. He did not stammer or choke on his words but must have done his research and his mathematics well to tell the whole world that Zimbabwe would achieve a much higher GDP growth than previously expected.
So much has happened in the last few months to give impetus to the economy. The confidence that such a figure, if not higher, is attainable, therefore, not misplaced.
The revised figure is largely attributed to the success registered so far under the Command Agriculture initiative, with reports that output will reach million tonnes anticipated initially. Farmers and stakeholders in the agricultural sector are really upbeat that results from the agricultural sector are not only good but quite impactful on the entire economy.
Command Agriculture has seen tracts and tracts of land put under maize with indications being that Zimbabwe will produce three million tonnes and may even export, for the first time in a very long time. Domestic consumption currently stands at 1,2 million tonnes. This achievement is quite laudable.
In poetic lingo, the sudden turn of events is called peripeteia hence Zimbabwe has reached its peripeteia moment. Suddenly moving from a position of lack into one of plenty. Hats off to the Command Agriculture project launched a few months ago. The three-year initiative is surely bound to transform the sector and hence the economy. That Zimbabwe will soon resume its regional breadbasket portfolio is no longer a fallacy but something within reach if we sustain the current momentum.
Millions of dollars have been injected into agriculture and Minister Chinamasa said this is the first time that amounts ranging between $500 million and $1 billion have been allocated to agriculture. He expected at least $3 billion from maize grown under Command Agriculture, the Presidential Inputs Scheme and from other A2 and A1 farmers who did not participate in the Command Agriculture project.
Furthermore, crops such as cotton, whose farmers are expected to produce 150 000 tonnes from 30 000 tonnes last season, and others such as tobacco and soya bean, are set to perform beyond expectations this year.
Tobacco auction floors opened yesterday with at least 205 million kg expected to go under the hammer this selling season. The crop has always had a significant impact on the economy. It has transformed the lives of thousands of growers while contributing significantly to the Gross Domestic product.
Parallel to the Command Agriculture initiative, we commend Government for addressing the ease of doing business that had largely been a sore point in attracting investment. Over the years, this country has been found wanting in terms of its investment climate resulting in only a few investors trickling into the country. Efforts to correct such issues as project approval processes, policy inconsistencies and other impediments have started to yield results. Its still work in progress though but the country has made headway.
The engagement of the international community that reached its peak last year when Minister Chinamasa and central bank Governor Dr John Mangudya went to Europe and other parts of the globe to plead Zimbabwe’s cause to the international community. Indeed it’s a global village and we need to commune with our neighbours and strike win-win deals.
On Tuesday the Government signed a Memorandum of Understanding with three financial institutions from the United States-Global Trade Finance, Rosenthal Group and Natrabank/Bullion Bank of Africa to facilitate investment through joint venture.
They intend to facilitate investment for the construction of infrastructure in agriculture, manufacturing, mining, transport, water, energy and power and other sectors of the economy.
Zimbabwe has largely been found wanting in this regard, with The Zimbabwe Agenda for Sustainable Socio-Economic Transformation (Zim-Asset) highlight these areas as requiring huge capital outlays. Zimbabwe needs at least $14 billion for infrastructure development.
“Against an array of administrative and legislative reforms currently being implemented by Government within the context of ease of doing business, it is envisaged that this form and magnitude of investment will turnaround the fortunes of the country within the next few years,” said the Chief Secretary to the President and Cabinet Dr Misheck Sibanda who signed the MOU on behalf of the Government.
These are initiatives that are set to benefit the economy directing while boosting brand Zimbabwe as other such partners are bound to follow suit.
News that the Command Agriculture initiative will soon be replicated in other crops and other sectors of the economy is most welcome and should see more growth and development. Reforms under the initiative should see a revitalisation of the economy. Sectors such as mining, manufacturing and a few others have for long, suffered from poor capitalisation. The use of obsolete machinery and low working capital levels have compromised output forcing many firms out of business while others are operating at low capacity levels.
This has adversely impacted on competitiveness on the local and international markets. Thousands of people have lost their jobs in the process.
Furthermore, the export market, which is a place for firms and countries with real muscle, has become a rough market for most Zimbabwean firms not because they are timid but that they have been elbowed out by those whose economies are performing well.
This has affected Zimbabwe’s trade balance with the country exporting more than it exports, which in simple terms translates to spending more than we are earning.
Last year Zimbabwe exported goods worth $2,8 billion, while imports were at $5,2 billion, leaving a huge trade deficit figure. Imports declined from $6 billion in 2015 while exports grew slightly from $2,7 billion.
Latest figures show a slight improvement in January where exports increased 3 percent to $258,61 million from $249,17 attributable to growth in the exports of processed industrial supplies at $97,1 million. Imports slowed by 2,72 percent at $384,6 million from $395,34 million in January last year but the month on month drop was much bigger at 21,42 percent.
Resultantly, trade deficit narrowed to $125,9 million from $146,16 million previously.
We sincerely hope that the new economic initiatives will be implemented expeditiously and ensure that these sectors are revived again. We could soon be talking of a major revival that will see the creation of thousands of jobs while entrepreneurs will be afforded the right economic environment to display their prowess. I am not being overly optimistic but just acknowledging that the probability for Zimbabwe’s economic regeneration is now much higher than it previously was. Command Agriculture has shown that this is quite possible so let us ride on it. Indeed we will reap what we sow, so why not sow more.
Efforts will need to be directed towards redressing issues such as late delivery of inputs or unavailability of chemicals that has constrained some farmers under the programme. These issues should not be swept under the carpet but demand due attention so that the farmers are truly equipped to do what they know best.
Furthermore instances where some farmers overstated their hectarage or sold some of their inputs will need decisive action so that such enemies of progress are not allowed to derail otherwise noble initiatives.
Corruption, which has a tendency of rearing its ugly head everywhere, should also be nipped in the bud if we are sincere about turning the fortunes of this economy around. Zero tolerance to the vice is the way to go. Already the economy is limping because of high levels of corruption.
As I stated early, this country has immense potential for growth. It requires all hands on deck to successfully steer the ship back on track.
In God I Trust!