The Sunday Mail
Editor’s Brief
Victoria Ruzvidzo
Reserve Bank of Zimbabwe governor Dr John Mangudya this week presented an optimistic Monetary Policy statement in which he concurred with Finance and Economic Development Minister Professor Mthuli Ncube that the economy will this year achieve a 7,4 percent growth despite present Covid-19-related challenges that have afflicted the entire globe.
Ordinarily, many would have expected the two gentlemen to revise their projections, particularly after the second wave that hit Zimbabwe hard at the beginning of last month, but they insist this will not deter efforts to achieve the target.
The country is indeed on a firm growth trajectory and it is all systems go.
The central bank governor’s confirmation, from the Monetary Policy front, demonstrates the economy’s ability to fend off obtaining challenges. The projected figure, it turns out, is not too ambitious as what other schools of thought have implied, but both the fiscal and monetary levers in this country insist it is within readch.
One would have feared that after the current wave of a new Covid-19 variant, Zimbabwe would find it impossible to rise from a negative growth rate as pronounced in November last year, but it is adamant that regardless of what surrounds us, the economy will still have the stamina to emerge from -4,1 percent to post a 7,4 percent GDP figure this year.
Of course, the optimism by Prof Ncube and Dr Mangudya is not baseless. It is premised on the anticipated good agricultural season, obtaining pricing and foreign exchange stability and the targets set out under the National Development Strategy 1.
Zimbabwe has received good rains that should benefit agricultural output while the foreign exchange auction system has steadied the ship. Runaway parallel market rates have been relegated to history with the obtaining stability now working well for the economy.
Although prices have generally been stable, increases in utility bills noted at the beginning of the year and rising prices of some basic goods and services resulted in inflation jumping from 348,6 percent in December to 362,6 percent last month.
But this should be tamed as the year progresses.
Dr Mangudya is confident that inflation will drop to 10 percent by year-end. The improved agricultural production will result in stable prices while a sustained foreign currency auction system will induce further stability while ensuring productive sectors are adequately funded to purchase raw materials and equipment.
This will subsequently lead to hyped production levels and the resultant reduction in the import bill.
At least 70 percent of the US$800 million allocated through the auction system went towards the importation of raw materials, machinery and equipment while 11 percent was allotted for the importation of pharmaceuticals, fuel and electricity.
Dr Mangudya said measures would be put in place to foster strict monitoring of the allocation of funds, a move that can only ensure increased effectiveness.
Cases of abuse of the facility through feeding the black market with funds allocated under the auction system have been told. these need urgent handling.
Any instances of indiscipline need to be eradicated so the economy can achieve its targeted growth figures.
On the pricing front, the Ministry of Industry and Commerce is obliged to follow through its promises to investigate any wayward behaviour by wholesalers and retailers and other service providers seeking to profiteer.
The beauty of it is that everyone in authority is reading from the same page. The body language by Government officials and the private sector shows great determination to revive the economy. They have confluenced around NDS1, itself a major step towards achieving an upper middle-income economy by 2030.
Dr Mangudya was upbeat nothing would stand in the way of unity of purpose.
Fiscal and monetary policies complement each other in dictating the pace at which the country progresses and indeed when partners work with a common vision and target, in one accord, the economy will emerge the winner.
This brings good tidings and the right energy levels Zimbabwe needs to get the economy back on track.
In his statement, Dr Mangudya promised to do his bit and challenged all individual and corporate citizens to follow suit. From the tone of his presentation, that the 7,4 percent growth figure will be achieved without doubt.
Over the years, I have observed that Dr Mangudya is one character who says it as it is. To the best of my knowledge he is not a people-pleaser but will tell you straight up that this will work or it will not.
I have had interviews with him and have heard him speak or respond to questions at many forums. I have found him to be consistent.
Hence he would not endorse the 7,4 percent growth just for the sake of it.
On his part, Professor Ncube has not minced his words. He is quite optimistic that this year the economy will achieve significant growth. He has remained steadfast in his desire to get the economy ticking. His high energy levels can only benefit the country.
Of course, they both take a cue from President Mnangagwa, who has been clear from the outset.
He is preoccupied with Zimbabwe’s economic revival and the consequent improvement of the nation’s standard of living.
NDS1 has clearly enunciated the objectives and roadmap towards achieving real growth as the country marches towards Vision 2030.
This will not be automatic, but demands hard work from all of us.
Challenges posed by Covid-19 on resource availability and allocation, the psychological effects on the labour force and other attendant factors are not lost to the powers that be.
The pandemic still presents a clear and present danger hence strategies being employed to overcome these need to be buttressed. Zimbabwe has the wherewithal.
“Overall, Zimbabwe’s economy is poised for strong growth in the short to medium term, buttressed by the resilience and hard-working of its people. The Bank would, therefore, like to express its gratitude to Zimbabweans for their resilience in these very difficult and challenging Covid-19 times. In this context, the Bank will continue to use its full range of tools to support the economy in these unprecedented challenging times to foster increased economic activity, employment, as well as price and financial sector stability,” said Dr Mangudya.
“While we have so much work ahead of us to rebound the economy, the Bank expects that the current global economic uncertainties will dissipate as the roll out programmes on Covid-19 vaccines gather momentum throughout the world. Stronger economic growth within the national economy will be underpinned by sound macroeconomic policies characterised by fiscal, financial and monetary stability.
‘‘Improved production and productivity will be key in sustaining the macroeconomic trajectory of growing the economy by 7,4 percent in 2021 and above 5 percent thereafter as envisaged in the NDS1.
“In this regard, the central bank affirms its commitment to continue ensuring a hawkish monetary policy stance, as well as sound financial conditions through its conservative monetary targeting framework. A co-ordinated approach to macroeconomic policy management, coupled with hard-working, law-abiding and country-loving citizens would be key in moving the economy to achieve Vision 2030 of being an upper middle-income country. In this regard, a market friendly investment climate that supports infrastructure development, conducive financial system, credible national institutions and a sense of responsibility and accountability will be critical to contribute towards overall economic development for a brighter future for all Zimbabweans.”
The global economy is expected to shrug off a negative growth rate of 3,5 percent registered last year 2020 to a positive growth of 5,5 percent this year. This is premised on improved economic activity, resulting from the anticipated positive effect Covid-19 vaccination programme. The significant recovery in the global economy are set to boost consumption and hence prices, of primary commodities, which are the key exports for Zimbabwe.
Therefore, Zimbabwe has immense potential to grow export earnings from the US$6,3 billion achieved in 2020. This was an improvement from the US$5,5 billion registered in 2019. Exports US$3,7 billion while Diaspora remittances stood at $1 billion, up from last year’s US$636 million.
Statistics from the central bank showed that NGOs chipped in with US$648 million while Foreign Direct Investment and Income receipt weighed in with US$40 million and US$56 million respectively.
In God I Trust!
Twitter handle: @VictoriaRuzvid2; Email: [email protected]; [email protected]
