A billion dollar pie in the sky

President Emmerson Mnangagwa’s drive to transform Zimbabwe into a middle-income country by 2030 is a more reliable and sober growth projection than opposition claims of creating a $100 billion economy in eight years, statistics from researchers show.

Using the Rule of 70 — a mathematical economics formula to estimate GDP growth rate – it would take at least 25 years for Zimbabwe’s GDP to reach MDC-T’s $100 billion claim while growing at a rate of eight percent per annum.

According to calculations by ZimFact — an independent online fact checking platform — assuming that the economy grows at eight percent per annum, in eight years Zimbabwe’s GDP will be $28 billion.

MDC Alliance principal told a rally in Murewa on March 24 that the opposition would create a $100 billion economy by 2026.

President Mnangagwa’s Zanu-PF is working on a target of growing the economy by at least six percent yearly until 2023, and attaining middle-income status by 2030 with GDP per capita of over $3 000.

The World Bank defines a middle-income country as one with GDP per capita of between $1 005 and $12 235.

Zimbabwe’s 2018 National Budget anticipates GDP to stand at $15,2 by year end. Using the Rule of 70, for Zimbabwe’s GDP to reach $100 billion in eight years, the economy will have to grow at 27 percent per annum – something that has never happened anywhere in the modern world.

In a recent critique of Zanu-PF’s 2018 election manifesto, former Deputy Prime Minister Professor Arthur Mutambara also said growth of six percent per annum was need to attain middle-income status by 2030.

He wrote, “We must use the Rule of 70, which is a mathematical calculation used in economics to calculate how an economy can double its GDP per capita given a specific growth rate.

“Under this rule, the number of years to double GDP per capita is equal to 70 divided by the growth rate.

“So, for example, if we grow by three percent, then it will take us 70/3 = 23,33 years to double our GDP per capita. If we grow at five percent, then it will take us 14 years.

“For Zimbabwe to double its GDP per capita by 2030, that is, attain a GDP per capita of at least $1 944, it needs to grow by about six percent every year for the next 12 years — which is a tall order. China did it though, but it is not easy.”

President Mnangagwa has emphasised the need to prioritise the economy over politics and declared a mantra that, “Zimbabwe is open for business”.

In the past six months, investors have committed $11 billion to various sectors of the economy, several multi-billion dollars deals are at various stages of negotiation.