Victoria Ruzvidzo In Focus
Zimbabwe’s economy is now poised for solid growth but needs to be buttressed to defuse the effects of such challenges as the liquidity crunch, complex project approvals, poor service delivery and other such that continue to hover over the economy.
The International Monetary Fund and World Bank, which are largely very conservative in their estimations, have also been left with no choice but to be generous, confirming the positive vibes currently obtaining, and a much brighter outlook. The IMF last week revised its initial forecast of minus 2,5 percent to a 2 percent growth while a few months ago the World Bank said this country would achieve a 3,8 percent GDP growth.
Recently, the Minister of Finance, Cde Patrick Chinamasa, revised the growth figure from an initial 1,7 percent to 3,7 percent, buoyed by the successes registered under Command Agriculture which is expected to produce three million tonnes of maize, much higher than the 1,2 million Zimbabwe consumes annually.
The confidence injected into the economy by the new growth projections is something the economy can only benefit from. Confidence has far-reaching effects on performance. And to have the two global juggernauts endorsing positive growth projections is something we should ride on.
The Bretton Woods institutions, by their very nature and influence, dictate things on the global stage and any positive word coming out of them can be a currency that can propel our economy in terms of access to multilateral and bilateral funding partners, Foreign Direct Investment and all the goodies that come with their edifying pronouncements.
Zimbabwe needs such to get out of the woods. Whether we like it or not, the IMF and the World Bank run the show in the global economy and we can only benefit from their sentiments on this economy.
Africa is expected to post a 2 percent growth while the global economy is expected to register a 3,5 percent growth, according to the IMF’s Global Economic Outlook for 2017.
The global lender said growth in the world economy would be anchored on buoyant financial markets as well as long awaited cyclical recovery in the manufacturing sector and trade.
For Zimbabwe, growth is attributed to a number of initiatives that have been put in place, top of them being the Command Agriculture programme that has revolutionised agriculture and could thus boost the manufacturing sector which draws 65 percent of its raw material from agricultural outputs.
The programme, which is now being extended to other crops, could soon see the country exporting such produce as maize, flowers and other horticultural products, most of which had long been off the shelf due to droughts, teething problems and other challenges that adversely impacted on the sector’s performance.
Pronouncements that Zimbabwe will soon become the region’s breadbasket once again are no longer mere fallacy but it’s now a real possibility. Hence the buoyancy because agriculture is the economy’s mainstay.
Already we have such countries as Spain moving in to support Command Agriculture through provision of farming equipment such as pivots. This can only augur well for the programme and the economy at large.
The adoption of new technology, as envisaged under the facilities with Spain, can only boost production in terms of numbers and quality. These are critical to fend off domestic competition and to boost exports.
Furthermore, yesterday we reported that the introduction of Statutory Instrument 164, which was initially met with serious rebuff, has saved the country at least $1 billion. Zimbabwe has largely been a net importer, losing billions of dollars in the process hence the impact of the saving will boost the economy.
S164 was met will shrill cries from consumers and cross-border traders, something we felt then to have been understandable and genuine concerns but reports by firms that production capacity has risen while domestic demand for products have also gone up bring good news to efforts to restore the economy.
This means firms have an opportunity to retool and even create employment. Many local firms have indicated that they have been given a new lease of life through the removal of some products from the Open General Import Licence.
There is still room for more growth and opportunities once the mindset that foreign is better is dispensed with.
We still expect to see companies making efforts to produce high quality products to meet demand while also introducing production efficiencies that will promote right-pricing of goods and services.
Additionally, the $20 million facility that will be unveiled this week to support three Bulawayo-based companies that manufacture equipment for small-scale miners will have a far-reaching effect on output. Obviously there is room for more funds to be allocated to more firms.
The small-scale miners form a critical component of the mining sector. The central bank will attest to the fact that small-scale miners deliver more gold ahead of the bigger firms while generally the SME sector has contributed immensely to GDP, absorbing the thousands of employees that have been retrenched over the years.
Therefore, any efforts to support this sector have a significant impact on wealth and job creation. This is a global trend.
Efforts that have, in the past few months, been directed towards ease of doing business are bound to produce results. We have witnessed a number of foreign investors getting quite excited about this country. We need to keep enticing more through efforts to untangle project approval processes and other facets such as policy inconsistencies that have often affected the portion of FDI that this country receives.
While we are assured of higher growth, we need to refrain from complacency. It’s early days yet and there is so much that needs to be done to get the economy firing from all cylinders. The state of the roads and other infrastructure and the provision of such basic services as water and electricity still leaves a lot to be desired. Much more needs to be done to address these.
One key strategy that could decisively deal with liquidity challenges and its attendant problems is growing exports. Statistics show that in 2016 Zimbabwe exported $3,4 billion worth of products, a 6,9 percent slide from the $3,6 billion achieved in 2015. Although it was an improvement from previous years, it still falls far short of the ideal situation. More exports means more foreign currency earnings, hence more money in the economy to transact and fund increased activity.
Currently, gems and precious metals account f or 36 percent of exports while tobacco and manufactured substitutes rake in 32,7 percent of export earnings.
So issues that need redress include ensuring high agriculture production even when we do not get enough rains. This means irrigation facilities need to be worked on expeditiously so that the sector is not found wanting each time we receive below normal rains.
Dam construction to harness water and availability of irrigation equipment are critical in this instance.
Value addition is also critical. We cannot expect to earn much from exporting raw materials. President Mugabe has stressed this countless times and we need to work harder in this regard.
We applaud industry for raising capacity utilisation to 47 percent. It’s a major stride but it still falls far short of what the economy needs. Continuous improvement and more concerted efforts will raise this. There is certainly nothing sinister about achieving 100 percent capacity utilisation.
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We need more policies and facilities that are pro-industry. More incentives, concessionary loans and other finance tools. Skills development and an appetite to keep pace with technology.
We cannot export if we don’t produce. And we also need well-defined and fluid value chains which are symbiotic.
Furthermore, high efficiency levels anchored on vibrant cost management practices will ensure firms become more competitive.
Quality and competitiveness are key in the global village.
China’s economic growth, though slowing, is premised on more expansive markets. So we need to draw lesson there.
Furthermore, corruption, which continues to compromise growth, needs to be curtailed for optimum benefits. It has fatal effects on the economy and we cannot continue to pay lip service to this cancer that is affecting our society.
We also need to broaden our markets beyond neighbouring South Africa for the simple reason that we expose ourselves to vicissitudes in their economy, which is outside our control, e.g. fluctuations in the rand. The world is a big place, let’s act like we know.
Furthermore, we need to minimise imports further. Most reflect our myopia and deeply flawed consumption patterns.
We should not miss some rudimentary lessons in business and economics which are time tested and proven.
The need to up our production levels is inescapabable as it is imperative to recalibrate our export drive.
Indeed, this economy, for all its potential, simply has to step up to the plate.
In God I Trust!