The Sunday Mail
Dr Obert Mpofu
Zimbabwe has witnessed several major developments with positive economic implications since the beginning of 2017.
The projects will have a significant impact in terms of job-creation, attracting related investment and revenue-generation. Given that these are greenfield projects and, therefore, requiring new jobs to be created, their impact on employment-creation will be quite high.
Although it is too early to give firm figures, what I want to say is that the rate of employment-creation will very much depend on systematic and efficient implementation by all stakeholders involved.
On our part as Government, we are determined to ensure that these projects are implemented expeditiously.
Beitbridge–Harare–Chirundu Highway
This highway connects major centres of economic activity in the country and the region. Investment in this major road network infrastructure project will have an immediate and long-run positive impact on cost and ease of doing business.
Other benefits that come with the project will include creation of employment, strengthening linkages with other sectors of the economy, attract other business activities along the super highway, particularly those in the hotels, restaurants and distribution sectors of the economy.
Cargo traffic from South Africa was now diverting from using the Beitbridge-Chirundu Highway, opting for other routes in the region.
This project should see increased cargo traffic through Zimbabwe and, hence, revenue for the country.
Mining machinery
Importation of new mining machinery will allow companies to replace obsolete equipment. For example, the recent equipment importation by the Zimbabwe Consolidated Diamond Mining Company of about US$32 million for diamond mining will positively impact diamond production.
This results in technology and skills transfer into the country. In addition, there are also spill-over effects associated with importation of new machinery such as lowering production costs.
Production in the mining sector will improve and, hence, an increase in economic activity, particularly in the area of exports where the sector historically has been a major foreign currency earner, contributing about 60 percent of total exports.
Tokwe-Mukosi Dam
This will bring about positive gains in the agriculture and fishery sectors of the economy. Agriculture is envisaged to increase in Masvingo, counteracting the effects of successive droughts and making the province one of the most important agricultural provinces in the country.
Consequently, this will result in increased economic growth since Zimbabwe is an agro-based economy.
Sugarcane production in the Lowveld is also going to benefit through increased water availability, which will allow increased hectarage under plantation.
Further, water supply in nearby urban areas such as Masvingo will improve. The possibility of hydro-electricity generation will enhance electricity availability, thereby saving foreign currency on electricity imports.
Apart from the above, there is strong potential for development of recreation and tourism facilities given that the project is the biggest inland dam, not only in Zimbabwe but in the region.
Bumper harvest
Maize and tobacco are major crops in the agriculture sector, contributing about 40 percent of the sector’s output in value terms. Therefore, bumper harvests in these crops will lead to growth in the sector, and overall economic growth.
Agriculture has a multiplier effect to GDP mostly with the manufacturing sector through agro-processing and the retail sector as most farmers’ disposable incomes increase, resulting in demand across many sectors of the economy.
As announced in the 2017 National Budget, initially, the economy was projected to grow by 1,7 percent in 2017.
However, following a very successful agriculture season and positive developments in other sectors of the economy, as I have outlined above, the growth rate is now certainly higher than the earlier forecast we announced in the 2017 National Budget.
In this regard, the Macro-Economic Planning and Investment Promotion Ministry, Finance and Economic Development Ministry and Reserve Bank of Zimbabwe will this month meet to come up with a revised growth rate for 2017, which I am very positive will be more than the initially projected 1,7 percent.
Government always tries to make sure that all sectors of the economy are performing well. However, there are some critical sectors like agriculture, mining, manufacturing and tourism.
These are some of the major sectors were emphasis will be placed this year.
In this regard, Special Economic Zones will be the workhorse in value addition and beneficiation.
Government lent strong support to maize production during the 2016/17 agriculture season, which has been a resounding success.
We are expanding that support to other crops and sectors of the economy.
Cash shortages
We have seen the Reserve Bank of Zimbabwe introduce bond notes to ease cash shortages. In addition, the general public is continually encouraged to make use of plastic money.
Government is continuously coming up with monetary and fiscal policies to enhance production in all sectors of the economy. Let us bear in mind that it is only through high, sustained and robust production that the challenge of liquidity can be addressed.
When production increases, exports and foreign currency earnings also increase. Apart from this, Government is also doing the following to ease cash shortages: encouraging Diaspora remittances; promoting FDI; and cutting non-essential imports through implementation of SI 64 of 2016.
Economic take-off
In 2016, Government enacted the Special Economic Zones Act; and these zones are envisaged to act as a vehicle for economic transformation that will see manufacturing contribute more to GDP growth and exports.
Currently, agriculture is the largest contributor to GDP, with manufacturing contributing less. By introducing SEZs, Government wants to put the economy on an export-led growth trajectory.
It is envisaged that SEZs will bring technology transfer, thereby increasing gross capital formation. Given that SEZ licences will be mainly for exporters, this should have a direct impact on increasing our exports, foreign currency earnings and liquidity.
Further, the current limited fiscal space should get a breather as the tax base will be broadened.
The establishment of SEZs will be accompanied by employment-creation, which will have positive downstream effects on the economy, including increased disposable income, aggregate demand and poverty-reduction.
The combined effect of these and the ultimate indicator will be enhanced economic growth.
Currently, Government has designated three SEZs namely Victoria Falls for tourism and finance; Bulawayo for manufacturing industries and Sunway City in Harare for information communication technology.
More designations will follow. However, in the interest of promoting investment, non-disclosure of detail is the norm when applications and negotiations are being conducted.
In this regard, it suffices to say that we are encouraged by the interest expressed to set up shop within SEZs by corporates from China, the United States, Germany, Russia, South Korea, the United Kingdom, India, South Africa and other countries.
In establishing SEZs, Government remains cognisant of the need to give equal access to both local and foreign companies regarding licensing.
I, therefore, encourage local entrepreneurs to make use of this opportunity as they are the ones who have all along kept the economy going.
- Dr Obert Mpofu is the Minister of Macro-Economic Planning and Investment Promotion. He shared this information with The Sunday Mail Reporter Debra Matabvu in Harare last week.
