The Sunday Mail
Enacy Mapakame
Business Reporter
Zimbabwe’s economy will significantly recover from decades of economic slowdown on the back of robust economic reforms, but this will not happen overnight as other sectors will slowly respond to Government initiated turnaround strategies, an internationally acclaimed UK based economic think tank, Fitch Solutions, has revealed.
The country’s tourism sector that recorded 2.5 million tourist arrivals last year, was singled out as providing a quick fix to the economy.
Fitch expressed confidence that economic and political reforms under the new Government would improve the business environment and growth prospects in the longer term.
“The new Government’s pro-investment rhetoric will likely support the beginnings of an uptick in investment into Zimbabwe as (President) Mnangagwa courts foreign investors and international lenders,” said Fitch.
This would see the economy recover, and improve disposable incomes.
Government is also targeting an upper middle income economy as espoused in Vision 2030 with gross national income per capita of above US$3 500.
A number of international analysts have described the current economic reform measures as progressive, saying Zimbabwe’s economy has a bright future.
Many say the pain being experienced presently will give birth to a better economy that will significantly improve the standard of living.
Fitch also acknowledged the situation will remain tough for the ordinary person in the short term, before improvements would be realised thereafter. For instance consumer spending will be eroded by current inflationary pressures while the 2 percent tax on electronic transactions is also adding to the “pain.”
This concurs with Finance and Economic Development Minister Mthuli Ncube’s notion recently in an interview with The Herald that the austerity measures being implemented would be tough in the meantime, but would start easing in the next six months.
“Reforms are continuing, but what happens is that over the next six months we are carrying out more reforms and will achieve quite a bit, so obviously after six months then we have less reforms and towards end of year, even less reforms.
“So we are doing more now and less as we go forward, but it does not mean reforms are finished we will still carry out more, for instance privatisation takes a while so it always carries on, but certainly on the macro-economic front, we should have made quite a bit of progress,” he said.
Minister Ncube said that some of Government interventions had started bearing fruit given that the State’s finances that were now “clearly in a better position”.
Added Fitch: “While we believe Zimbabwe will emerge from years of low growth with the implementation of structural reforms under a new dispensation, and that household spending in the country will increase in the years to come, the near-term consumer outlook remains bleak withlow-income levels and income security weighing on spending habits.”
Fitch also hold a positive outlook for the tourism industry in the mid-term to year 2022 on the back of increased tourist arrivals especially from Asia and other markets outside Africa.
This comes as Zimbabwe and neighbouring Zambia re-introduced the previously discontinued “Uni-Visa” between the two countries, which will allow visitors to stay in either country for up to 30 days. The Uni-Visa will also allow visitors to take one-day trips across the border to national parks in Botswana.
The refurbishment of the Victoria Falls International Airport will also play a critical role in improving accessibility into the country with 2018 arrivals projected to reach 2,5 million. The country, however, still needs to work on improving infrastructure to enhance access to tourist destinations. Zimbabwe is generally blessed with natural attractions and is home to one of the Seven Wonders of the World, the majestic Victoria Falls.
“. . . overseas arrivals are forecast to increase. Even though Zimbabwe has great potential to become a tourist hub through its vast array of attractions, this potential is hindered by unsophisticated travel routes, poor infrastructure and adverse policies deterring international investments,” said Fitch.
However, Government has already realised this and there is massive airports rehabilitation programmes under way at Robert Mugabe International Airport to the tune of US$153 million, while the Victoria Falls and Joshua Nkomo international airports have been spruced up.
The mining sector is also expected to play a key role in economic turnaround together with tobacco industry, which are the country’s biggest export earners.
Last year, for instance, tobacco output reached a record level of 252 million kilogrammes and is expected to further grow by 7 percent this year. Overall economic growth will also remain vulnerable to weather fluctuations and commodity prices as stronger harvests in the agriculture sector will also see export revenues gradually recover.
