Economic recovery: What needs to be done

Our Vision 2030 expresses our aspiration to upper middle-income status with a per capita income of US$3 500.

The economy whose growth rate this year has been revised upwards from 4,5 percent to 6 percent confirms that the aspiration is achievable.

Our Transitional Stabilisation Programme (TSP), which is already underway, seeks to do just that.

Like all stabilisation programmes, there are pains to be borne and sacrifices to be made before things start looking up for the ordinary man in the street.

We must all gird for belt-tightening measures, leaders and ordinary citizens alike. No one is immune to the sacrifices that are necessary to stabilise the economy.

Those of us in leadership across all sectors of our economy must show the way through even bigger sacrifices.

Lately, Government has announced a raft of monetary and fiscal measures which the markets are digesting daily for business decisions. This process has triggered initial dis-equilibria in the economy, which have shown by way of instability in prices.

I am fully conscious of this and remain committed to ensure that we stabilise things in the shortest possible time. Equally, I am aware that information must continue to flow to the citizenry so that there is an appreciation of the direction we are taking, the course we must walk and the sacrifices to be made, and for how long.

Government continues to work flat out to protect consumers, defend wage values and secure savings.

This includes the $9 billion in RTGS deposits in our banks. We are already putting in place legally enforceable measures to protect such earnings and savings, whether in local or foreign currency.

No one will lose their money.

Temporary pressures must not blind us to the major gains we have made and continue to make on the economic front. Let us keep our focus on things that matter and on what needs to be urgently done.

Exceeding Expectations

The mining sector continues to exceed expectations. By end of September, the country had a total cumulative output of 28 tonnes of gold, surpassing last year’s annual output of about 24 tonnes. This is unprecedented and at this rate, we are confident that our annual target of 30 tonnes will be surpassed.

Our lithium beneficiation project in Kwekwe is off to a good start, pointing to better times ahead on the back of this strategic mineral which is on demand worldwide.

Diamonds have done exceedingly well, with well-founded expectation that we will meet our target of three million carats this year, up from the 1,8 million carats realised last year. The proceeds per carat have more than quadrupled, which presents good sales prospects for the two more auctions we expect soon.

The investment in the conglomerate plant at Chiadzwa has proceeded smoothly, and will be commissioned in the coming weeks. From it, we expect not just a surge in the quantity of diamonds, but also an improvement in the quality on offer.

In respect of platinum, all the three major producers are at various stages of their capex programmes, with Karo Resources, the youngest kid on the block, now on site, ready to commence operations.

The country is set for expanded platinum output, greater value addition and beneficiation for more decent jobs as well as broad-based empowerment.

Production for both chrome and coal is scaling up.

Another project to watch is that of a major steel plant by a Chinese investor who already has a footprint in the country. This labour-intensive project, alongside the Karo Resources platinum project, will mark a turning point in terms of job and wealth creation.

The early dry spell last season did not dampen our agricultural sector.

Today, maize deliveries currently stand at nearly 1,2 million tonnes, clearly exceeding expectation and making us a food secure nation. We will not slacken on this front.

The era of food insecurity and expensive food imports is permanently behind us.

Farmers stand assured of viable producer prices. On their part, they must invest more in the land and increase productivity.

Increasingly, our agriculture is being funded by the private sector. This is the way to go. I encourage the private sector to take long-term funding positions in the full knowledge that there will be no policy reversals. Government will, instead, seek to expand the range of crops supported under the Command Agriculture Programme.

The superb story in the tobacco sub-sector is now well known. We achieved 255 million kilogrammes, the highest harvest in the history of tobacco growing in this country.

We continue to explore new avenues for ensuring this new record is consolidated and even surpassed.

Similar measures are underway in the soya, cotton, horticulture and livestock sub-sectors where greater strides will soon reflect.

I am aware that wheat imports have fallen short of national needs. It is a gap which is normal this time of the year as we await a new crop currently being harvested.

Wheat farmers will urgently get adequate fuel for the harvest, as well as those farmers who have begun land preparations.

Historically, we have had a mismatch between developments in the water sector and those in agriculture.

Dam construction has often run ahead of land and irrigation preparations.

To cure this mismatch, I took a deliberate decision to put land reform, agriculture and water under one ministerial portfolio. Seamless decisions will now be made on land allocation, land utilisation, water development and water utilisation for rapid results.

Balancing the Books

But there are more things that must be done with urgency.

The national budget will be balanced and the appetite for public spending restrained so that the cost of running the public sector remains within set targets.

The wage bill must come down to levels which are sustainable, supportive and stimulate private sector-led economic recovery and the growth that we envisage and desire.

To date, we have reduced the size of Government by way of the number of ministries.  We continue to rationalise operations of the remaining ministries, including retiring or redeploying senior officers to more gainful areas.

Starting the cut at the top demonstrates our resolve to bring the wage bill down to sustainable levels.

The end-state will be a trim, efficient and responsive bureaucracy which is free of corruption and runs efficiently and effectively.

Reforms on State enterprises and parastatals must pick pace. The reform template is clear. Some State enterprises and parastatals will be sold and others privatised. Entities which show potential to run viably will be commercialised. Those handicapped by under-capitalisation will be allowed to find equity partners.

Lastly, those which no longer have reason for commercial existence will be dissolved.

The excessive money supply experienced in the past to meet public sector expenses will be curbed. Government will learn to live within its means.

Increased revenue inflows through efficient and effective revenue collection are essential to the whole recovery programme.

Better revenue inflows create more fiscal space to deal with the current budget deficit of $1,8 billion, which is projected to reach $2,3 billion by year-end, and to meet costs of delivering on key social services that are both essential and unavoidable to protect the poor and vulnerable.

The recent fiscal measures announced by Government must be understood in that light.

Zim and the World

As I write, our delegation led by the Minister of Finance and Economic Development, is in Bali, Indonesia, where it is meeting development partners and creditors.

This initiative, which is a continuation of our engagement and re-engagement policy, has elicited good responses from IFIs and development partners.

The numerous contacts I made on the sidelines of the United Nations General Assembly gave our country a solid stock of goodwill which our delegation in Bali has fully exploited.

Key countries which include the United Kingdom, France, Germany, Italy, the Netherlands, Australia, South Africa, the EU bloc and even the United States of America, have responded favourably to our engagement overtures, and have welcomed our debt-settlement plan for the US$5,6 billion we owe IFIs and the Paris Club, and our Transitional Stabilisation Plan which we will now fully implement.

The People’s Republic of China continues to support us both bilaterally and internationally, including by way of private sector investments which continue to enhance national capacity.

Early next year, I am set to meet President Putin in Russia to explore ways to enhance our co-operation.

Bold Responses

A great threat to our bid to stimulate productive activity in the economy comes by way of non-productive, speculative activities operating below the radar but involving millions in precious foreign currency and bond notes.

These nefarious activities thrive on different electronic platforms. New measures will be pursued to stop such malpractices.

I call on all of us to tread back into the real economy, away from the current practice where currencies become key commodities that transact in dark markets, controlled by shadowy figures.

The costs and havoc this wreaks on the whole economy have become quite apparent and most unfortunate. A bold response is merited.

To that end, this problem is now being treated as a serious security threat which requires a different response so that we get back to clean, productive and disciplined economic activity operating within norms and rules of the market.