The Sunday Mail
Livingstone Marufu —
THE country’s biggest business lobby group, the Confederation of Zimbabwe Industries, is optimistic economic growth will top four percent in 2017 driven by increased agricultural, manufacturing and mining output.
The forecast is more than the conservative 1,7 percent estimate by the Ministry of Finance and the 3,8 percent World Bank projection.
Experts are confident of a successful 2016/2017 summer cropping season buoyed by favourable rainfall patterns across Southern Africa.
Agriculture employs over 70 percent of the population directly and indirectly, and feeds the manufacturing sector with more than 60 percent of its raw material requirements.
Commodity prices are also expected to recover, driven by “tightening supply and strengthening demand”, while Statutory Instrument 64 of 2016 — which restricts selected imports — will give tailwinds to the manufacturing sector. CZI vice-president Mr Sifelani Jabangwe told The Sunday Mail Business that if the key sectors grow as anticipated, the economy will grow by a significant margin this year.
“First and foremost, we are hoping that the country’s specialised agriculture scheme will succeed, and given the quality of crop in the fields, two million metric tonnes is attainable. Our import bill will reduce by over US$287 million by merely achieving food security.
“Several other farming support schemes running into millions of dollars are also being rolled out with a bias towards boosting communal producers, cotton, soya bean and livestock while providing raw materials for industry,” said Mr Jabangwe.
Last year’s El Nino-induced economic contraction wiped off more than US$896 million in value from the Zimbabwe Stock Exchange.
However, CZI cautioned that value addition strategies remained critical for the cotton to clothing; beef to leather; agribusiness; and food and beverages chains.
“Given the success we have recorded in cooking oil, rubber, plastic and milling sub-sectors, we are moving in the right direction, but we have to consolidate the benefits of SI 64 of 2016 to ensure the continued success of industry. Consequently, we expect the capacity utilisation to increase to 65 percent by year-end from over 47 percent last year.
“We anticipate that the challenges of foreign currency availability will be addressed soon as the central bank has set up a raft of measures to deal with that.
“This year tobacco auction floors are going to open early to ease the liquidity crunch in the country,” said Mr Jabangwe.
Government is also working to improve the business environment.
The 2016 Zimbabwe National Competitiveness Report by the National Economic Consultative Forum, a local think tank, indicated that Government reforms were beginning to make a difference.
But it also urged more reforms to make the economy competitive.
CZI says if the country continues to tackle corruption, bureaucracy, policy instability and inconsistency, taxes and poor work ethics, economic growth would be greater.
Commodity prices to recover
Market watchers say the performance of the mining sector will largely depend on the recovery of international commodity prices and the completion of planned investments.
Treasury expects mining to grow 6,9 percent this year, underpinned by output in gold, platinum and nickel.
In a January 24, 2017 statement, the World Bank said metal prices would probably rise more than forecast this year.
“The Bank is raising its metals price forecast to an increase of 11 percent from the four percent rise anticipated in its October outlook on further tightening of supply and strong demand from China and advanced economies.
“Prices for most commodities appear to have bottomed out last year and are on track to climb in 2017 … However, changes in policies could alter this path.”
Conversely, precious metals prices are seen declining seven percent as benchmark interest rates rise and safe-haven buying slows.
In the week ending January 16, 2017, gold prices rose 1,9 percent to US$1 189 per ounce, while platinum and nickel prices advanced 3,2 percent and two percent respectively.
Economist and senior lecturer at the University of Zimbabwe Dr Albert Makochekanwa said the country should speed up reforms to attract FDI.
“The projections for Zimbabwe are a bit optimistic and the country need more concerted efforts in speeding up the domestic economic reform process in order to unlock more investments and to spur increased economic activities,” he said.
If local economic growth rises to more than three percent, it will be eclipse the 2,9 percent growth projected for Africa south of the Sahara.
