The Sunday Mail
Kuda Bwititi: Chief Reporter
It cannot be denied that Zimbabweans are resilient. Despite the challenges they faced on various fronts, they should be credited for making the best out of 2016.The year began on a sad note with a drought threatening both agriculture and food security. Then towards the end, there were cash shortages.But there were manoeuvres during the course of the year to bring the economy to a better performance. A sneak peek into the crystal ball shows that the strategies might start to pay off this year.
There are a number of massive infrastructure projects that are set to take shape in the coming year, making 2017 vital in the country’s economic turnaround efforts.
Harare-Beitbridge-Chirundu Highway With construction of the road set to start in March this year, the $1 billion road will result in lucrative economic spin-offs for the country. Once construction begins, it is anticipated that thousands of people are going to be employed — from those who slash grass to experienced draftsmen.
The significance of the road cannot be overstated as it is the biggest road infrastructure the country has had since lndependence. According to Transport and Infrastructure Development Minister Dr Joram Gumbo, construction of the road will be divided into eight segments with five between Harare and Beitbridge and three between Harare and Chirundu.
It is envisaged that during construction, the eight segments will each cover a region of about 120 kilometres of tarred roads.
Communities who reside in these areas will benefit from the flurry of activity, triggering a business boon.
The initial work to start construction, which includes removal of vegetation, removal of earth, construction of embankments and blasting of rock, will open job opportunities for a good number of people that are sitting at home. Companies in the business of supplying bitumen, quarry stones and sand stand to make rich pickings as their products will be on demand when construction of the road starts.
Government has already determined that 40 percent of the work on the road will be done by locals. Life-changing opportunities await small and medium enterprises that are also in line to receive their biggest pay cheques ever if they win contracts to work on the road. Downstream industries in such localities will also stand to benefit significantly as services such as catering, transportation, consultancy and many others will get a piece of the huge cake.
The road, therefore, presents a sea of opportunity for many Zimbabweans who need to seek what they can offer in this once-a-lifetime chance. Critics will obviously say here they go again and try to spread the usual negative sound bites to discredit the deal. However, the signing of the $984 million deal between Government and Geiger International last November means the deal will leave doomsayers with egg on their faces.
Command Agriculture
The Command Agriculture model is turning out to be a masterstroke.
Although it is still early to make concrete conclusions, the situation on the ground paints a bright picture as crops are doing well. The scheme is proving to be just what the doctor ordered to increase production and guarantee food security.
Under the scheme, Government availed a $500 million facility including seed, fertiliser and fuel for farmers to grow maize through a cost recovery basis.
With more than 400 000 hectares having already been put under Command Agriculture, the scheme is showing signs that it will anchor Zimbabwe’s economic recovery efforts. If all goes well, the country could wave goodbye to grain imports next year as the scheme aims to produce two million tonnes of maize — which is enough to feed the country. Given that in 2016, Treasury forked out more than $300 million to import grain, Finance and Economic Development Minister Patrick Chinamasa will now have breathing space as the funds can be directed to other needy sectors.
Farmers contracted under the Command Agriculture scheme are likely to score big if the crop comes good as they will be paid a handsome fee of $390 per tonne. Although there are a number problems affecting the scheme, such as liquidity challenges and late delivery of fertiliser, the programme is generally exhibiting flickers of success and come harvest season, the country could achieve a bumper harvest.
Diamond mining
The diamond sector witnessed some shake-ups during the year, which saw a reduction in productivity. About three million carats of the gems were mined in 2016, compared to 4,7 million carats the previous year. Government ordered jettisoning of all companies that were mining the precious stones in the Marange area.
Only Marange Resources and Diamond Mining Cooperation (DMC) were left to mine their claims as Mbada, Anjin, Jinan, Kusena, the defunct Gye Nyame as well as DTZ-OZGEO in Chimanimani were all ordered to shut down.
Mbada and Anjin took Government to court over their expulsion and the matter is now before the Constitutional Court, with the ruling expected this year.
Once the ruling is made, the ministry is surely expected to bend its back and make up for the lost time by ordering resumption of maximum production at Marange.
There are already glimmers of hope to that end as research has shown that production at Marange Resources and DMC shot up by up to five-fold at some mines.
At Marange Resources, previous production stood at about 10 000 carats per month but during the course of 2016, the figure shot up to between 45 000 to 50 000 carats. At DMC, production used to be around 25 000 carats but is now about 45 000.
These positive signs point to a brighter future in 2017. In his clearly unwavering passion to see things being done properly, Mines and Mining Development Minister Walter Chidhakwa has ordered closure of many companies in the mining sector, at times justifiably, but at times drastically.
One hopes Minister Chidhakwa loosens his whip in 2017 so that production, instead of mine closures, make the headlines.
The mines at Marange have potential to produce monthly output of 500 000 carats, which translates to at least 6 million carats a year. In the mining sector, gold and platinum are also expected to perform better after the yellow metal earned the country more than $1 billion amid signs that it could still improve further.
Over the years, platinum has rarely disappointed and in the coming year, the $264 million investment by Zimplats will result in further increase of production.
Fickle global commodity prices will, however, remain a cause for concern.
Special Economic Zones
This new baby could well take the country by storm. After the Special Economic Zones Act has been gazetted, all that is left is implementation of this vibrant economic model, which can stimulate Foreign Direct Investment. To date, local and international investors have started submitting applications to invest in projects under Special Economic Zones (SEZ) as authorities begin implementation of the model.
In his budget presentation recently, Finance Minister Chinamasa announced incentives that will be offered to investors under SEZs.According to Minister Chinamasa, the incentives include exemption from corporate tax, special initial allowance on capital equipment to be allowed at the rate of 50 percent, duty-free imports for raw materials that are not produced locally and free duty on capital equipment.
The SEZ model involves creating a selected number of geographical areas that are endowed with economic potential to become industrial growth centres.
In Zimbabwe, potential areas that have been identified for SEZs include Victoria Falls (tourism) Bulawayo (leather and textile manufacturing), Manicaland (diamond cutting and polishing) and Sunway Industrial Park in Ruwa. Special Economic Zones have proved to be successful in other countries, especially China, where cities such as Guangzhou, Shanghai, Shenzhen and many others became economic centres that followed the model.
Upgrading of the thermal
power station
The Chinese delivered on the expansion of the 300 Megawatt-Kariba hydro plant and are set to up the ante with the construction of a 600MW plant at Hwange.
The $1,4 billion deal for the expansion of Hwange Seven and Eight power units is inching closer to reality after Parliament started the processes to ratify the deal.
Harare and Bulawayo power stations are also set to undergo a major retooling worth $87 million during the second quarter of this year. Expansion of Hwange Power station is among the mega-deals signed by President Robert Mugabe when he visited China in 2014. The deal will see China-Eximbank providing a loan to finance expansion of Hwange Power Station at concessionary rates.
Cash shortages
Reserve Bank of Zimbabwe Governor Dr John Mangudya has been very honest about the cash challenges. In a statement on December 19, the central bank chief said there is no quick-fix to the cash challenges.
“Clearing of cash queues at banks can never be an overnight event. It is a process,” as he explained the introduction of more bond notes onto the market.”
The catch is to increase production across all sectors, boost exports and earn the country the much-needed foreign currency. With 2017 just started, it might be worth looking into it with a different eye. Perhaps every Zimbabwean should introspect and pose the question: What have I done to boost production for the economy? The action might not be physical, but moral support to those trying to get things right will make a difference.
It takes concerted effortless to make 2017 the year of economic turnaround.
