Source: Key issues need attention for economic growth this year | The Herald
Zimbabwe is expected to have registered solid economic growth of at least 7,8 percent last year, but analysts and observers feel more needs to be done to attain growth targets for 2022.
Among key issues cited is the need for the Government to address issues constraining agriculture, mining, infrastructural development, price and exchange rate stability.
Finance and Economic Development Minister Mthuli Ncube, in his 2022 National Budget Statement, projected Zimbabwe’s economy to grow by 5,5 percent this year.
Similarly, strong agriculture performance, improved global metal prices, massive public infrastructure projects and supportive policies and business environment could anchor growth.
Minister Ncube contends the projected 5,5 percent growth would be reinforced by higher output in mining, manufacturing, agriculture, construction, accommodation and tourism.
“The underlying assumptions for the projected growth include the following: normal to above normal rainfall pattern, subdued Covid-19 pandemic, relatively stable exchange rate and declining inflation and favourable international mineral prices,” he said.
As such, economists said to achieve the 5,5 percent growth, the Government should consider the basic economic tenets needed to improve agriculture; a key pillar of Zimbabwe’s economy.
Harare economist Victor Bhoroma said it would be critical to bring finality to the land question by issuing title deeds to resettle farmers.
“We have to have finality on the issue of land tenure because there needs to be a crowding-in of private sector investment in agriculture.
“One of the issues constraining (agriculture) is lack of a clear land tenure title for all the resettled farmers, if they do not have title deeds they cannot access funding which we know agriculture needs,” he said.
Economist Langton Mabhanga said Zimbabwe’s agriculture was on the rise, but the regime of subsidies for farmers needed to ensure that the actual participating farmers benefit more.
“Government should not pocket the whole savings, but should share with the farmers across all sectors. Irrigation of any magnitude must be incentivised and a crop grown from irrigation feed must be rewarded through Government packages, much more than the market prices,” he noted.
Mr Mabhanga added that climate proofing domestic farming must be one area the Government needs to continue to invest in and promote to sustain the success of agriculture.
Commenting on key interventions required to attain the projected 5,5 percent economic growth through agricultural improvement, Mr Mabhanga said, “Innovative strategies will help us win the war.”
Another economist, Dr Godfrey Kanyenze said an encouraging rainy season would be the fundamental basis for achieving national growth targets in 2022.
He noted that in Zimbabwe, agriculture provided strong linkages with the rest of the economy and in particular, the manufacturing sector.
“A favourable weather condition generally determines how the economy performs, in the previous years like in 2019 and 2020 we had droughts hence the negative growth,” he noted.
Agriculture, directly and indirectly, provides livelihood to more than 70 percent of Zimbabwe’s population and it contributes significantly to overall economic growth.
It also supplies the majority of inputs to the food processing sector.
Further, economic analysts said to achieve the 5,5 percent growth target, the Government needed to formalise and incentivise operators within the country’s mining sector.
They stressed that the growth targets would be attained if mining models are buttressed with effective controls to minimise leakages and under declarations in the sector.
Mr Bhoroma said in mining, Zimbabwe should prioritise the formalisation of artisanal mining to reduce the rate at which minerals were allegedly being smuggled out of the country.
Commenting on imperatives for growth in the mining sector Dr Kanyenze said, “Attracting external investment is also very important especially when we look at the mining sector.
Dr Kanyenze further added that Government needed to address pricing and exchange rate issues, highlighting that inflation remained high even although it came down markedly last year.
“We need to address the issue of price and exchange rates stability and issues related to the auction system. Once we have a proper price discovery mechanism through the auction system, that will be a good help in terms of accessing foreign currency by industries, hence a gateway towards the 2022 economic success,” he added.
Mr Bhoroma weighed in on the issue saying Zimbabwe needs a market-driven foreign exchange market, therefore, making a review of foreign exchange regime imperative.
While the auction system has been highly successful and hailed for relative price and exchange rate stability, glitches have resulted in delayed disbursements and limited supply.
Economists also said continued infrastructure rehabilitation and enhancing the business environment were important for the country to attain projected growth this year.
“We still hope that 2022 we will not have much of the Government lockdown programmes, which may undermine business, so continuous vaccination will eventually help us achieve that,” Dr Kanyenze said.
Mr Mabhanga said the fact that the Zimbabwean economy was already moving in a positive trajectory provided the confidence for strong possibility of success and growth this year.
Before the Covid–19 pandemic, Zimbabwe’s economy was already in recession as realigning of policies, including removal of certain subsidies, fuel shortage and forex issues weighed on the economy.