EDITORIAL COMMENT: Mid-term fiscal review on the money

31 Jul, 2015 - 00:07 0 Views
EDITORIAL COMMENT: Mid-term fiscal review on the money

The Herald

Zimbabwe is not doing badly in economic terms with all sectors, except the critical agriculture, likely to grow quite strongly this year, led by tourism and mining. Even the Cinderalla manufacturing sector is moving faster into recovery, as more and more industries realise what is needed. The serious problem, and what is going to limit total economic growth to 1,5 percent for 2015, is agriculture, which was hit by a late start to the rains and then poor distribution of the rain that did fall.

A crash in the value of the total harvest of all crops and livestock production of 8 percent made a big dent in growth rates, but it is important to notice that the growth in the other sectors more than compensated for that near disaster.

So Finance and Economic Development Minister Patrick Chinamasa, when he presented his Mid-Term Fiscal Policy Review Statement yesterday, was quite correct in concentrating on what was going right, how to reinforce that trend and how to overcome problems in the volatile agriculture sector.

The minister talked about the need to drought proof the economy, especially as volatility is likely to become worse as climate change worsens. This will require more than just increasing irrigation capacity and other modest improvements.

It may well require considerable research and a great deal of heart-searching among all farmers over how to make agriculture more viable and a more stable contributor to national wealth.

If nothing else, it absorbs more manhours of work than any other sector in the economy and is critical in providing a livelihood for millions of Zimbabweans.

It is fairly obvious that the old ways are not going to work much longer and new ideas, new tecniques and novel thinking are required.

Industry is showing the way. It has now learned that the old ways cannot be restored. The increase in manufacturing output of 1,6 percent this year, faster than the 1,2 percent of last year, reflects what we have said before, that a growing number of industrialists have made the switch from protected monopolies producing overpriced second-rate goods to open markets where quality and price rule.

Newcomers to industry are finding unexploited niches and are starting to fill these. Such testing times will ensure that as the eastern half of Africa moves towards free trade, our industrialists will be prepared to compete effectively.

Tourism growth, the fastest of all sectors, shows the advantages of creating a decent product and marketing it properly, and other sectors can learn from that.

Mining in Zimbabwe is still growing well, largely because the demand and prices of the minerals we export are less dependent on single markets than, say, base metals. Demand for gold, platinum and palladium grows roughly in line with global growth, not just growth in one country or one region. So prices are a lot less volatile than many other minerals.

The minister saw the negative inflation rate as a positive factor; as we have noted before Zimbabwe does not suffer deflation. Slowly falling prices amid growth suggests we are doing a lot of things better, and the growing spending power will boost demand, not cut demand.

Finally, the minister’s appeal for all to close ranks makes sense. Whatever our political persuasion surely more national wealth, more jobs and moving large numbers of Zimbabweans out of poverty are common goals.

We are obviously doing quite a lot that is right and debate should not dwell on trashing our progress, but instead be generating new ideas to speed up this growth and progress.

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