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Tinashe Makichi  Harare Bureau
The African Development Bank (AfDB) says Zimbabwe should implement policies that ensure access to credit to complement the performance of the manufacturing sector that has been showing signs of improvement since the beginning of this year.In its Zimbabwe monthly economic outlook for February, AfDB said positive developments were registered in the manufacturing sector as some firms have been trying to enhance their production capacity.

“Four manufacturing firms intend to invest about $27 million in their production processes. Policies that ensure access to credit and improve the general investment climate could complement such efforts to improve the sector’s performance,” said AfDB.

The financial institution said Zimbabwe’s economic performance in February was affected by the movements in international commodity prices, which in turn had an impact on the government revenue mostly from the mining industry.

On a month on month basis, the price of gold declined 1,70 percent from an average of $1,250.40 in January 2014, whereas the platinum price declined by 3.39 percent from $1,242 per ounce over the same period.

“The decline in international gold prices affects government revenue from the mining industry. For example, this resulted in a decrease in the value of gold produced by the country from $626,1 million in 2013 to $614 million in 2014, despite the rise in output by 9 percent to 15.3 tonnes,” said AFDB.

Total gold deliveries increased by about 25.6 percent to 1,169.31 kg in February, from 931.4 kg in February last year. Deliveries by primary producers decreased slightly by 1.33 percent to 751.5kg in February, while deliveries by small-scale miners increased by 146.14 percent to 417.86kg during the same period.

However, despite the increase in gold deliveries, total gold earnings are declining due to reduction in gold prices on the international market.

During the period Brent crude oil price recovered by 18 percent in February from an average of $49,78 in January.

AfDB said this exerted upward pressure on domestic fuel prices, which had fallen over the past two months. Wheat price continued to soften in February, registering a high of $256 per tonne and a low of $243 whereas for the same period in 2014 wheat price reached a high of $311 and a low of $295 per tonne.

AfDB said this affected the uptake of wheat from local farmers, especially those who are not on contract farming, who have to sell to millers while the millers would prefer cheaper imports.

“Zimbabwe continues to operate under a difficult economic environment, even though there were some positive developments during the month of February 2015.

“Compared to other countries in the region, Zimbabwe continues to have the lowest inflation rate, which has since turned into deflation,” said AFDB.

As at February 27, AfDB said the number of tobacco growers registered to grow the crop in the this cropping season decreased by about 985 compared to the number of farmers who had registered to do so over the same period last year.

AFDB is of the view that low prices at the auction floors could have discouraged some farmers from continuing with tobacco farming.

As for cotton, Zimbabwe continued to be among the top 10 African cotton producers in 2014 despite falling production of the crop from 450,000 ha in 2011/2 to 300,000 targeted for the current season.

Total government revenue for the month of January 2015 declined by 29.86 percent from their December 2014 levels owing to the poor performance of the various revenue heads as the tax base continues to shrink due to depressed economic activities.

On the other hand actual government expenditure for January 2015 was 43.1 percent above the target of $278.8 million with recurrent expenditure exceeding its target by 40.8 percent due to payments of staggered bonuses carried forward from 2014.

Value added tax on accommodation for foreigners in January 2015 was generally not welcomed by hotel operators in the country.

Although this might be in line with what is charged in South Africa and Zambia, the country’s use of a stronger currency, which has been appreciating against the South African rand and other currencies, makes hotel accommodation for foreigners more expensive in Zimbabwe.