‘Worst over, economy on recovery path’

Source: ‘Worst over, economy on recovery path’ | Herald (Top Stories)

‘Worst over, economy on recovery path’
Prof Ncube

Africa Moyo

Deputy News Editor

Zimbabwe’s economy has been through the worst of sorting out the fiscal and monetary problems inherited by the Second Republic and Government is now working on ensuring strong growth from this year, riding on achievements recorded under the Transitional Stabilisation Programme (TSP) and the growth measures enunciated in the National Development Strategy 1 (NDS1). 

Further, measures to cushion civil servants and vulnerable groups of society will be widened this year, despite the challenges brought by Covid-19.

In a wide-ranging interview with The Herald recently, Finance and Economic Development Minister Professor Mthuli Ncube said although the year has started with a tightened lockdown induced by Covid-19, prospects of recovery were high on the back of a promising agriculture season due to excellent rains across the country, and expected higher mineral prices.

“The economy is now on a path to recovery. The worst is over and Government is now working on ensuring the economy recovers strongly, taking advantage of the milestones from the TSP, and supportive measures as enunciated in the NDS1,” said Prof Ncube. 

“Our key priority will be to nurture the stable macro-economic environment currently prevailing in the country by continuing to implement prudent fiscal and monetary policies. 

“Furthermore, the Government will bring forward business and infrastructure investment activity and adequately prepare and support the productive sectors, in a manner that does not promote vulnerabilities and instability.”

Prof Ncube said Covid-19 remains a serious challenge to Zimbabwe and the world at large, particularly in light of “most worrying” emergence of new variants of the virus, which spread faster and are potentially more deadly.

He said Zimbabwe draws encouragement from the fact that the world is now rolling out vaccines and Harare is taking delivery of its first batch of vaccines from China today.

The manufacturing capacity of the vaccine remains constrained to meet the huge demand and distribution has largely favoured developed countries. You may also note that the distribution mechanisms of the vaccine are also a challenge as some require strict refrigeration all the time. 

“It is our hope that as the production lines are expanded, Africa and other developing countries will easily access them. Having said that, the pandemic is indeed causing a risk to the economy, threatening realisation of our projections for the year 2021. 

“However, you may be aware the economy has contracted for the past two consecutive years, putting it on a very low base hence giving room for recovery. 

“You may also note that drought was one of the major drivers of the recession during the past two years as agriculture activities and electricity generation was compromised. However, the season to date has been quite positive, and is promising to be a better season that presents an opportunity for a strong rebound of the economy.”

Prof Ncube projected in the 2021 National Budget that the domestic economy was largely expected to rebound and register growth of 7,4 percent this year.

The African Development Bank has projected a 5,6 percent economic growth this year driven by recovery in the agriculture, mining, and tourism sectors, together with increased public and private investments.

Prof Ncube said considering that the Government did not impose a blanket ban on all economic activities in the Covid-19 containment measures, with productive sectors such as mining, agriculture and manufacturing, allowed to continue operating, that should be positive for economic growth.

As the country brings under control the obtaining second wave of Covid-19 in the shortest possible time, which is already happening due to declining new infections and deaths, economic activity will recover.

“So, the thrust of Government is to expedite the rolling out of vaccines. As Government we remain positive on the outlook of the economy in 2021.

“As the year progresses, we will be able to fully assess how the positive impact of some sectors of the economy such as agriculture and electricity availability counteract the negative impact of the virus on some sectors like tourism, education and the informal sector,” said Prof Ncube. 

The favourable rainfall season so far has come at an opportune time when Government has put in place various initiatives such as the Pfumvudza/Intwasa Conservation Scheme and the National Enhanced Crop Productivity Scheme (Command Agriculture) targeting maize, traditional grains, soya beans and cotton.

Crops are generally in a satisfactory situation across the country and there are bright prospects for a bumper harvest.

Critically, the good rains are set to boost domestic electricity generation at Kariba.

Prof Ncube said availability of uninterrupted power supply to the productive sectors will be critical in enhancing production going forward.

“We are also grateful that the country has been spared from the devastating impact of two tropical cyclones (Chalane and Eloise) that have hit the region to date with minimum damage to agriculture, infrastructure and livelihoods,” said Prof Ncube.

“The economy is also set to benefit from the relatively higher international mineral commodity prices expected this year. We know that there are high prospects of recovery of the mining industry in 2021, basing on the recent State of the Mining Industry Report produced in 2020, which indicated that about 90 percent of the miners are planning to ramp up production in 2021 while 10 percent expect to remain at the same level.

“Production is expected to increase by between 10 percent and 30 percent, while capacity use will rise to 80 percent in 2021 from 61 percent in 2020. However, we also know that these expectations are subject to downside risks from the pandemic.”

He did not expect the mining sector to be adversely affected by the heavy rains across the country, as it was only small-scale miners that normally had to suspend operations during this time of the year while large-scale miners have established coping mechanisms to continue with production.

Growth in communication services was noted during the lockdown as demand for the services spiked, and this is expected to positively affect performance going forward.

Government is optimistic of maintaining the TSP gains through the successor NDS1 running from 2021 to 2025. 

This year, particular attention will be on inclusive growth and macro-stability; developing and supporting productive value chains; optimising value in natural resources; infrastructure, ICT and digital economy; social protection, human capital development and well-being; effective institution building and governance; and engagement and re-engagement.

All the efforts are designed to attain Vision 2030 of an upper middle income economy. 

Turning to health workers, Prof Ncube said Government and the entire nation are indebted to the “bravery and sacrifice of our health workers” who face the Covid-19 pandemic daily to save lives.

Government will continue to provide incentives that ensure health workers and other civil servants providing valuable services under the difficult circumstances are compensated accordingly. 

By December 31 last year, Treasury had released about $24,5 billion to fight the pandemic. The resource envelope included risk allowances for frontline personnel and support to stimulate production.

Vulnerable groups of society will also be supported, with Social Assistance Benefits allocated $5,5 billion in the 2021 Budget.

The outbreak of the Covid-19 second wave was an emergency, with humanitarian needs that will be met from the contingency and other budgeted expenditures. Affected citizens would be assisted within the broader traditional social protection interventions such as Drought Mitigation, Harmonised Social Cash Transfer and the Basic Education Assistance Module (BEAM) programmes. Beneficiaries of such programmes will go through some means testing for eligibility.

In terms of devolution, Prof Ncube said Government remained cognisant of the right of communities to manage their own affairs and to further their own development.

A number of projects are ongoing and following the coming in of the second wave and the lockdown measures, Government is looking at modalities and measures of sustaining the implementation of devolution programmes and projects. 

Already, most road construction projects have been categorised as essential services, allowing contractors to undertake works but in line with the World Health Organisation and Ministry of Health and Child Care Covid-19 regulations.

COMMENTS

WORDPRESS: 2
  • comment-avatar
    Ndebele 3 weeks ago

    What are you smoking – please share it – it must be really strong Binga Best Mbanji, Mthuli.

  • comment-avatar
    Saddened 2 weeks ago

    It must be a real genius to say the country is on the road to recovery basing all his facts on god and nature. Nothing to do with planning, economic prudence, stop the loot. Sorry to say good rain in one year does not make an economic recovery.