Zimbabwe’s economy is set for a major turnaround next year on the back of far-reaching policy interventions whose implementation will thaw systems of doing business.
Throughout 2015, Government dumped the laisser-faire approach to doing business, with President Mugabe enunciating a 10-Point Economic Plan that is target-driven.
And as Zimbabweans bid farewell to 2015 this week, many fair-minded realists will admit that the year marked a paradigm shift in regards Government efforts to revive the economy.
Throughout the course of 2015, Government has been refining its systems to bridge policy formulation and implementation with a number of far-reaching policy interventions having been adopted.
Vice-President Emmerson Mnangagwa was tasked by President Mugabe to lead the Economic Revival Cluster, and to supervise ministers and permanent secretaries to ensure they deliver socio-economic transformation.
VP Phelekezela Mphoko was assigned to supervise Zim-Asset’s Infrastructure and Utilities and Social Services and Poverty Eradication clusters.
The 10-Point Economic Plan, announced in the State of the Nation Address in August, has kept Government officials on their toes.
The plan targets revitalising agriculture and the agro-processing value chain; advancing beneficiation and/or value addition to the agricultural and mining resource endowment; focusing on infrastructure development, particularly in the key energy, water, transport and ICTs subsectors; and unlocking the potential of SMEs.
Other aspects of the plan include encouraging private sector investments; restoration and building of confidence and stability in the financial services sector; promoting joint ventures and public private partnerships to boost the role and performance of state owned companies; modernising Labour laws; pursuing an anti-corruption thrust; and implementation of special economic zones to provide impetus for FDI.
In line with the aspirations of the 10-Point Economic Plan, the Office of the President and Cabinet’s Public Affairs and Knowledge Management directorate, led by Ambassador Mary Mubi, has been going around the country assessing challenges faced by companies and attempting to find solutions.
The tour has taken the team to Harare, Bulawayo, Gweru and Kwekwe.
Regional financiers such as the African Export-Import Bank, the African Development Bank, the African Capacity Building Foundation and the United Nations Development Programme have expressed interest in rescuing illiquid companies that have growth potential.
In particular, the Egypt-based Afreximbank is understood to be working on a resource envelope of between US$50 million and US$100 million for companies that are facing working capital shortages.
Recently, the Office of the President and Cabinet also held a workshop in Harare to assess progress made by Government under the Doing Business Reform Agenda as part of the 10-Point Economic Plan.
The workshop coincided with the close of a 100 Day Rapid Results Initiative, launched in September 2015 to fast-track key business environment reforms to lure investment.
After scoring badly on the Doing Business Index, Government sought the support of the World Bank Group in 2013 to deliver on an ambitious reform strategy.
The reforms, which focus primarily on improving the business environment for local entrepreneurs and laying the foundation to attract sustainable and mutually beneficial FDI, are expected to enhance Zimbabwe’s competitiveness, create jobs, generate revenue and support growth from 2016.
A steering committee led by Chief Secretary in the Office of the President and the Cabinet Dr Misheck Sibanda and comprising the deputy chief secretaries and key permanent secretaries was constituted in September to lead an accelerated reform effort through a rapid results approach.
Five thematic technical working groups, reporting to the Steering Committee, were constituted to conceptualise reforms and deliver on action plans developed by stakeholders.
At the close of 100 days on Monday last week, the technical working groups had drafted or amended more than eight pieces of legislation, by-laws and regulations.
They have also streamlined various processes to improve operations in several Government ministries, departments and agencies.
Some of the proposed new laws include an Insolvency Bill that promotes a culture of corporate rescue to preserve jobs in companies that are viable but are experiencing challenges.
There is also the Movable Property Securities Interest Bill that will permit responsible lenders to lend against movable assets as collateral and thereby improve access to finance for SMEs in particular.
A Shop Licensing Bill will eliminate the onerous regulatory burdens that confront entrepreneurs trying to formalise their businesses while the Commercial Court Bill will permit expeditious settlement of commercial disputes through accelerated processes.
Business processes that straddled multiple Government agencies have also been streamlined including the processes to pay taxes at the Zimbabwe Revenue Authority and securing construction permits from the Harare City Council.
Deputy Chief Secretary Dr Ray Ndlukula said: “Overall progress made by the steering committee on the various Doing Business indicators is acceptable and is meeting most of the targets set out at the onset of our reform effort.
“But reforming is a long-term effort, which will greatly contribute to our country’s economic recovery. We need to maintain our reform momentum and implement further rapid results initiatives.”
According to the World Bank’s 2016 ease of doing business data, Zimbabwe is number 155 out of 189 economies and below the regional average for Sub-Saharan Africa which is 143.
Regional counterparts Botswana, South Africa, Namibia and Lesotho are ranked 72,73, 101 and 114 respectively.
In line with the rapid results approach framework, an urgent overhaul of the Companies Act is set to be concluded by the end of this week.
The aspirations of the 10-Point Economic Plan dovetail with the country’s five-year economic blueprint, Zim-Asset.
Government’s commitment to turn around the economy was also exhibited at the recently concluded Zanu-PF 15th Annual national People’s Conference which ran under the theme “Consolidating People’s Power through Zim-Asset”.
Ministers took turns to appraise delegates of what they were doing to turn around the economy.
But arguably the biggest coup this year was the endorsement of Zimbabwe’s debt clearance strategy by international creditors in Lima, Peru.
Zimbabwe is saddled with a debt of almost US$10 billion to international lenders.
Finance and Economic Development Minister Patrick Chinamasa described the acceptance of the debt strategy as a “major breakthrough in the financial history of the country”.
“The developments in Lima are the first important milestone and serious step towards resolution of the debt arrears clearance and the efforts to address the debt overhang of the country, which is an albatross around efforts to recover the economy,” said Minister Chinamasa.
The debt clearance strategy is expected to open doors for the country to obtain the much needed long-term capital for infrastructure development at reasonable interest rates and repayable over longer periods.
Zimbabwe owes US$110 million to the IMF, US$1,15 billion to the World Bank and US$601 million to AfDB.
With Zimbabwe showing its commitment to service the debt, the Chinese have stood by the country to help the economy recover.
China’s President Xi Jinping visited Zimbabwe at the beginning of December and reaffirmed that the deals signed last year and new ones penned during his visit would be pursued without fail.
Of major importance were agreements signed in critical areas such as power generation and infrastructure development.
As part of measures to address the power deficit in the country, two major projects worth a combined US$1,8 billion are currently underway at Hwange Thermal Power Station and Kariba South Power Station.
At Hwange Thermal Power Station, Sino Hydro, Hatch and Zimbabwe Power Company teams are already on site for the extension of the plant’s Units 7 and 8.
The extension project costs US$1,3 billion and will result in Hwange Thermal Power Station’s electricity generation rising by 600MW on completion.
Hwange, the country’s oldest coal-powered plant, was producing 449MW on Monday last week from an installed capacity of 920MW.
The Kariba South expansion will bring in 300MW to the national grid on completion in 2018. A Chinese firm, Sino Hydro, is working on the project at a cost of US$533 million.
The Finance and Economic Development Ministry estimates that Zimbabwe needs at least US$30 billion, almost twice the GDP, to revamp its aging and dilapidated infrastructure.
Given the quantum of resources required to revive infrastructure, Government has crafted the Joint Venture Bill to promote long-term economic growth in the provision of quality public infrastructure services that promote private sector competition, open new markets and opportunities for citizens to participate in the economic activities of their choice.
The JV Bill has already been passed by the National Assembly and now awaits Presidential assent.
President Mugabe also showed his disdain for sub-standard work by slamming poor workmanship on the US$206 million rehabilitation of the 820km Plumtree-Harare-Mutare highway by Infralink.
The Harare-Masvingo-Beitbridge Highway is also in line for refurbishment and widening most likely beginning next year.
The route generates a lot of business for the country as it is the gateway to most African countries such as Zambia, Malawi, DRC and Tanzania.
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