Significant economic growth expected in 2015

ZISCOSTEELYoliswa Dube Features Reporter
Zimbabwe is poised to register some economic recovery with the year ahead presenting inspiring economic trajectories that analysts say will be critical in improving the country’s fortunes.Last year, windows of expectation and hope were opened following the signing of nine bilateral cooperation agreements between China and Zimbabwe, as the two countries strengthened economic and political relations.

More expectation was ignited after Zimbabwe and Russia signed an agreement for the setting up of a $1 billion platinum project in Darwendale under a deal expected to create thousands of jobs.

The platinum project, which was dubbed the biggest in Zimbabwe and among the biggest mining ventures in the world, is expected to boost economic  turnaround.

The project, likely to see the setting up of concentrators and a smelter, is a joint venture between the Zimbabwe Mining Development Corporation and Russian state-owned high tech corporation, Rostec and VB Bank.

It is expected to significantly boost value addition and beneficiation which are key pillars of Zim-Asset, the country’s economic blueprint.

China is ready to work with Zimbabwe to promote the comprehensive and in-depth development of the bilateral relations to further benefit the people of both countries.

The bilateral cooperation documents with China covered the fields of telecommunications, infrastructure financing, food donation, tourism, and student exchange programmes.

“What’s important is to look at what has happened to date in order to understand what lies ahead. We’re looking at a country with more than a fair share of natural and human resources,” said economist Dr Davison Gomo.

He said Zimbabwe is unique because it is coming out of economic and political sanctions which had been imposed on the country over a protracted period of time.

“In our case, the country is coming out of a time of economic and political sanctions that had a devastating effect on the country. What was worse was having media claims describing the country as unsafe, politically unstable and so forth which made it difficult for the country to attract investment.

“But this is all in the past. The European Union lifted these sanctions except on President Mugabe and the First Lady, which is a worrying factor because it determines whether or not the country is a worthwhile investment destination,” said Dr Gomo.

The economic analyst said there were countries that were nonetheless able to see beyond the negativity and had decided to invest in the country anyway.

“They see that there’s virtually nothing wrong with Zimbabwe. There’s going to be more and more foreign investment coming in and the world will warm up to Zimbabwe. The media also plays a critical part in this matrix because it should not portray the country as though it’s always in election mode. The most important thing is to create an environment in which the country attracts investment,” he said.

Dr Gomo said politicians will also learn that politics is not the end product but economic development is.

“Of course there are still problems here and there, with a little bit of a fragile banking sector and under-capitalisation of industry among others but the general mode is we’ve done enough politics, can we now do more business. Zim-Asset is a clear business strategy that people need to understand. Economically, we’re likely to be in a much better position 12 months from now,” he said.

The development of a strategy for the establishment of Special Economic Zones paves way for coordination of foreign direct investment in value addition and beneficiation across various sectors of the economy.

Efforts to mobilise additional resources in support of Zim-Asset are also being underpinned by the development of the respective frameworks for setting up of the Sovereign Wealth Fund, Joint Ventures, as well as Special Economic Zones.

Global economic growth is projected at 3,8 percent in 2015, compared to the 3,3 percent in 2014.

The increase in growth will be driven by a rebound in both advanced economies and emerging markets.

In the emerging market and developing economies, inflation is projected to decline in 2015, reflecting the extent of softening of commodity prices, particularly those for food commodities, which have a high weight in consumer price index baskets for these countries.

Downside risks to growth prospects of both developed and developing economies will remain a concern in 2015.

These risks relate to geo-political conflicts, including the turmoil in the Middle East and international tensions surrounding the situation in Ukraine.

“There’s a lot of interest in many sectors of the economy including mining and energy for example. What we don’t want is inconsistency and ambiguity. I see this country moving to recovery, it’s not going to be instant coffee but the smell of coffee is everywhere just about now. Equity between employers’ interest and employees and international relations will also be important. There’s no reason why we shouldn’t progress. Who knows, this time next year we’ll be talking about a whole new story,” said Dr Gomo.

Owing to fresh investment, deals penned with Russia and China, as well as being sanction-free, Zimbabwe can now build its economy confidently.

The country is no longer just looking East but everywhere and the land reform programme is gradually bearing fruits with tobacco output reportedly being on the increase as well as hope to revive off shoot industries in Bulawayo.

Bulawayo based economist Ephraim Makara said the country’s economic prospects for the year ahead were bright.

“We’ve had good rains, if they persist, there’ll be bumper harvests and because 80 percent of the people in the country rely on agriculture for food, it’ll save the country a lot of money in terms of food security. I wish we could improve electricity supply in industry. The reduction of telecommunications tariffs will also save a lot of company money spent on communication,” he said.

Makara said one of the most overlooked economic hazards which needed to be addressed was that of road carnage.

“We lose a lot of people and consequently a lot of money in road carnage. Stray animals along the country’s highways have become an economic hazard. Economically, a country with good roads attracts investment. Zim-Asset is a very good product, we need to pull in the right direction and we’ll make it. In general, it is going to be a good year,” he said.

Zimbabwe has in the past entered into agreements to revive the defunct Ziscosteel, now NewZim Steel but the fruits of the deals are yet to be enjoyed.

Years of mismanagement and neglect took their toll on ZiscoSteel, which was a strategic company to the country’s economy employing over 3,000 workers.

It produced hundreds of thousands of tonnes of steel annually for domestic use and export markets. Ziscosteel was also strategic as many downstream industries benefited from it.

The government resolved to swap 54 percent of its shareholding in the parastatal for a $340 million foreign and domestic debt takeover by a Mauritian company, Essar Africa Holdings.

Resumption of operations at NewZim Steel has taken longer than expected amid indications the firm has to build three new plants before normal work starts.

Minister of Finance and Economic Development Patrick Chinamasa in the 2015 National Budget said the resolution of external indebtedness and clearance of arrears remains a critical component to unlocking new financing.

“We’ve made progress with regards to strengthening the domestic financial market to effectively play its role in supporting the clusters of Zim-Asset. Therefore, as we look into 2015 and beyond, a lot is required of us to drive the unfinished business for the successful completion of the Zim-Asset agenda, said Minister Chinamasa.


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