The Sunday Mail
Oliver Kazunga
Senior Business Reporter
MINING and agriculture will remain major economic mainstays anchoring Zimbabwe’s macro-economic growth this year, driven by continued investments in the two sectors, economic commentators have said.
Over the years, mining and agriculture have been significantly sustaining the country’s economy, which grew by 6,5 percent in 2022, while last year’s economic growth was estimated at 4,5 percent.
The economy has also been resilient to external shocks, like the global supply chain disruptions, compounded by the ongoing Russia-Ukraine conflict and the Covid-19 pandemic.
On account of the predicted El Niño phenomenon in the 2023/2024 summer cropping season, the Government and the private sector have proactively collaborated to mitigate the adverse impact of the dry weather condition on agriculture.
Mitigatory initiatives in place include continued implementation of climate-proofed agricultural models.
The World Meteorological Organisation has warned of El Niño conditions that could severely impact farm output in Zimbabwe and some regional countries in the 2023/2024 summer farming season.
While the depressed mineral prices trend on the international market is seen continuing this year, threatening revenue from the mining sector the world over, the Government has set sights on continued improvement of production in the mining industry, and promotion of value addition and beneficiation.
It is hoped this would mitigate the adverse impact the commodity prices depreciation on the world market will have on revenues from Zimbabwe’s mining sector.
Economic commentator Mr George Nhepera said mining and agriculture are expected to remain pivotal in bolstering Zimbabwe’s economy.
This, he said, is despite the prevailing situation that is marred by the current subdued mineral prices on the global market and the envisioned drought due to the predicted El Niño phenomenon.
“Our growth in 2024 will continue to come from two main sectors, which are mining and agriculture; mining because we see a lot of discovery and investments in that sector like what this Australian company (Invictus Energy) has just done in Muzarabani, where gas has been discovered.
“So, our key leverage for growth in 2024 will remain coming from mining in spite of the low prices for some of the minerals, but that’s just a temporary thing. Hopefully, prices will stabilise and have more from that sector.
“And the Government is putting in place issues to do with adding more value in that sector,” he said.
Mr Nhepera said the Government is also expected to make headway in stabilising the exchange rate and inflation, which have always remained an elephant in the room that has adversely affected planning and budgeting for citizens and business.
“Hopefully, in 2024, there will be other alternative policies the authorities will come up with to help us in that regard. For example, as of now, you are aware that the black market exchange rate is spiralling versus the interbank rate, which is trailing behind by a huge margin, so the 20 percent or less premium as expected by the IMF (International Monetary Fund), we are nowhere near that.
“That’s a policy issue that needs to be attended to,” he said.
In a separate interview, economist Professor Gift Mugano said the development in the mining industry through investments such as the US$1,5 billion steel plant in Manhize near Mvuma by a Chinese firm, Dinson Iron and Steel Company, is a game changer in reducing the country’s import bill.
“The developments in Manhize are very positive in terms of cutting down steel imports and generating exports of steel because we spend about US$300 million per year importing steel.
“So, if it’s going to start producing, we are going to cut down that steel import bill and generate foreign currency in 2024.
“The activities in the mining sector are quite massive across a number of minerals. We see a lot of developments in the lithium sector and we like that because it helps us to build the much-needed foreign currency.
“What is very critical is to push the value addition agenda because of the importance of lithium and other minerals in the green economy,” he said.
Turning to agriculture, Prof Mugano said the drive by the Government, through the Ministry of Lands, Agriculture, Fisheries, Water and Rural Development, to promote growth of the sector is encouraging. He said this would see agriculture emerging as one of the key sectors of the economy this year.
“The move to push more relevance in terms of commodity exchange is quite good, where even maize, soya bean and wheat are now part of the commodities that must be traded on the commodities exchange.
“It’s a good development in terms of policy perspective because we have always been raising concern that we need to create a viable market ecosystem for the agriculture sector to bring in the private sector in funding agricultural production and marketing of the same commodities,” he said.
In light of the adverse effects of climate change, it is now clear that Zimbabwe experiences drought after every two years and basing on that record, Prof Mugano said, the country needs to build massive grain reserves.
“It is clear that we get drought after every two years of good harvests and we need now to be smarter and build surpluses in good years and build a strong strategic grain reserve which can take care of us for the next three years if we have drought,” he said.
Zimbabwe National Chamber of Commerce president Mr Mike Kamungeremu said fiscal and monetary authorities worked throughout 2023 to tame the runaway inflationary pressures, as well as stabilising the exchange rate.
This, he said, has been through various interventions that included continued implementation of a tight monetary policy stance, and introduction of gold coins and digital tokens.
“As we look forward to 2024, there is some optimism from industry and commerce.
“There is a positive sentiment across businesspeople getting into 2024 mainly because of the extension of the multi-currency to 2030; it brought a lot of certainty in the market. While that optimism is there, we are aware that it has already been forecast that there will be normal to below-normal rainfall, so there is likely to be a drought and that drought is going to affect business,” he said.
“At the same time, we also have the current situation where commodity prices are depressed and that is spilling into 2024 and will affect business.
“However, it’s good to note that businesspeople themselves are more optimistic of better prospects next year despite the impending drought because, on the other hand, the Government and the private sector have collaborated to reduce the effects of the drought, whose impact also spills to business, particularly the agro-processing industry,” said Mr Kamungeremu.
