What Zim-Asset has achieved so far

Business Editor
WITH the Zimbabwe Agenda for Sustainable Socio-Economic Transformation (Zim-Asset) now due for mid-term review, keen interest surrounds its implementation and possible outcomes.

Anchored on four strategic clusters — value addition and beneficiation, infrastructure and utilities, food security and nutrition, social services and poverty eradication — the five-year development policy is premised on leveraging the country’s natural resources to achieve economic growth through empowerment of ordinary Zimbabweans.

An average of 7,3 percent growth target and creation of about two million jobs is to be achieved within the period. Zimbabweans are pinning their hopes on the anticipated turn around, seeking answers on progress made so far.

Finance and Economic Development Minister Patrick Chinamasa shares some of the achievements made towards meeting the ideals of the national blue-print. While insisting the economy is on the right path towards recovery, he also captures highlights on progress from mega deals signed between Zimbabwe, China and Russia recently.

“As you may all be aware, the Zim-Asset framework covers a number of issues across well defined clusters. We need reliable infrastructure and a strong production base in order to achieve sustainable development,” he told Parliament last week.

“Further, confidence in the financial services sector is central to the achievement of Zim-Asset goals. The financial system plays an important intermediary role that involves mobilising domestic resources and efficiently channelling them into productive activities. Financial sector confidence is enhanced when the Central Bank is empowered to play its proper role.”

Implementation of mega deals signed between Zimbabwe, China and Russia

Zimbabwe is in the process of implementing the signed mega deals with China and Russia. However, background work is required prior to the implementation of any project, said Minister Chinamasa.

He gave a snapshot of the stages that have to be followed to fully realise gains from the deals.

These include — signing of memoranda of understanding, conducting pre-feasibility and feasibility studies, conducting environmental impact assessment studies (EIAS), appraisal of feasibility reports, carrying out due diligence exercises by both parties, signing of loan agreements, release of funds and project implementation.

The minister said a number of projects were at various stages of implementation under the economic cooperation with China.

Kariba South Hydro Power Station Extension

The government of Zimbabwe and China Exim Bank signed a $319.5 million preferential buyer’s credit loan agreement for the project on November, 11, 2013.

Two generating units of 150 megawatts each, giving a total of 300 megawatts, will be added at Kariba South Hydro Power Station. The target project completion date is 2017. This project is being implemented by Sino Hydro Corporation. To date, a total of $100.4 million has been disbursed.

Increasing power generation capacity at Hwange

The power generation capacity has since been increased to 690MW from 450MW. Four mini hydro schemes have been initiated although only Pungwe B is currently generating electricity. Various road rehabilitation projects have since been undertaken countrywide. NetOne has since secured funding for the expansion of its network.

Hwange Thermal Power Station Expansion

The government of Zimbabwe is currently negotiating with China Export and Credit Insurance Corporation for $1.3 billion financing of Hwange units 7 and 8. The project will add an additional 600 megawatts to the national grid.

NetOne network expansion

The government and China Exim Bank signed a concessional loan agreement to provide funding of up to $218.9 million for the implementation of NetOne network expansion phase 11 project on August 25, 2014. To date, a total of $65 million has been disbursed.

Upgrading of the Victoria Falls International Airport

A facility amounting to RMBI (Chinese currency) 1.025 billion, which translates to approximately $150m was secured for the purposes of developing the Victoria Falls International Airport. Cumulative disbursements to date are $79.9 million.

Other projects

The development and rehabilitation of the City of Harare municipal water and sewage treatment works of $140.2m and the medical equipment supplies, $89.9 million are progressing well. Cumulative disbursements to date are $68.6m and $71.9m respectively.

Russia deals

The government of Zimbabwe and Russia signed an agreement on cooperation in the implementation of the $4 billion Darwendale platinum group metals deposit on September 16, 2014.

Subsequent to that, President Mugabe launched the Darwendale Platinum Project and Brook Metal Deposit Project on the same day. The project is in three phases. Phase one 2014–2017, phase two 2018 –2021 and phase three 2022–2024.

Phase One

The first phase involves exploration and designs among the preliminary works. The initial annual platinum group of metals concentrate production is estimated at 265,000 ounces with an estimated capital outlay of $550m.

The project is currently underway with over 40,000 metres of exploration having been covered to date.

Phase Two

The production and capital investment targets for the second phase are 500,000 ounces and it will cost $770m respectively.

Phase Three

Production is expected to increase to at least 790,000 ounces. An additional investment of $460m will be made during this phase.

Minister Chinamasa acknowledged that most Zim-Asset projects were primarily addressing issues of infrastructure, a key factor in attracting investment and long term in nature.

“We’ve to close the infrastructure gap. In this respect, the priority infrastructure is power generation seconded of course by road construction, dualisation, water and sanitation, ICT infrastructure and so forth,” he said.

The minister said the government was also engaging various multilateral and bilateral financial institutions to unlock funding for other productive sectors to foster short term economic growth. He said while some of the projects were being done by foreign firms, local companies were and would benefit from subcontracted work and provision of different services.

Infrastructure and utilities

“We’ve seen some interests in the areas of renewable energy, thermal power generation plants, rehabilitation of railway infrastructure and construction of dams and water reservoirs. Some of the projects currently on our radar include: Kariba South Hydro Extension and repowering of Harare Thermal Power Station that have been completed,” he said.

Food security and nutrition

We continue to explore ways of enhancing productivity in the agricultural sector. The government is currently rolling out a mechanisation programme targeting the small scale farmers with a view to raising productivity under the “More Food International Programme” with the assistance of the Federal Republic of Brazil.

We’ve also been promoting investment in irrigation and water supply infrastructure in order to raise productivity in the local communities. Investing in irrigation infrastructure will go a long way in addressing the adverse effects of the climate change and also enhance productivity in the agricultural sector.

Value addition and beneficiation

We see huge value addition and beneficiation opportunities in agro-processing and mining industries in the country. Reasonable progress has been made in the mining sector to promote value addition in platinum in particular. Some platinum producers are in the process of submitting to the government their plans for the establishment of refineries.

A lot of work has gone into the area of diamond cutting and polishing where various models are being explored.

Social services and poverty eradication

Our budget remains very sensitive to the social services sectors such as health, education and agriculture among others. We’re also working with the development partners to ensure that these sectors are ‘fully funded’. Servicing of high and medium density suburb stands in Bulawayo and Harare has also been done.

Restoring confidence in the financial sector

We’ve also taken action to restore confidence in the financial sector through recapitalising the Reserve Bank of Zimbabwe, establishing the Zimbabwe Asset Management Company (Zamco), demonetising the local currency and resuscitating the interbank market activities.

Recapitalising the Reserve Bank will enhance its ability to supervise the banking sector and assume its central banking functions, which are crucial for the financial sector stability.

Zamco will help free the banking system from the burden of high non-performing loans that limit the bank’s ability to extend credit to the private sector and keep the cost of credit high.

The demonetisation process that started on June, 15, 2015 will run up to September, 30, 2015. A total of $20 million has been mobilised for this exercise. This is an important step in our pursuit to restore market confidence.

International Re-engagement

Addressing the country’s external debt is a key focus area. We’re stepping up our efforts to build consensus among all development partners on ways to address our arrears that continue to limit our ability to participate on the international financial markets.

The arrears have had a negative effect on Zimbabwe’s ability to raise cheap international debt and also access concessional funding from the development financial institutions. The government established a debt management office in the Ministry of Finance and Economic Development that is responsible for coordinating all the public debt related issues.

The office has so far created a database, is in the process of reconciling the debt figures and has developed a debt resolution strategy that we’ve since shared with the creditors. We’ve also been running a staff monitored programme (SMP) with the assistance of the International Monetary Fund (IMF). We met all quantitative targets and structural benchmarks for the reviews done to date since the first programme.

Efforts to enhance credibility exports, inward foreign investment, Diaspora remittances, loans and grants or aid are among the main sources of liquidity. A number of initiatives have been implemented in order to promote liquidity, for instance, restoring banking sector confidence and promoting exports. Cabinet on the 4th of June 2015 approved the temporary lifting of the ban on the export of chrome ore and chrome fines, centralisation of gold buying by Fidelity Printers and Refineries among others. Gold deliveries have improved significantly.

Ease of doing business

Currently, efforts are underway to address both the cost and ease of doing business in the country. The Ministry of Industry and Commerce is championing our efforts to enhance the country’s competitiveness. According to the World Economic Forum (2015), Zimbabwe’s global competitiveness index improved from 131 to 124.

We’re working on the legislation to establish Special Economic Zones (SEZs). This is a vital step towards implementing the SEZ. The Joint Ventures Bill is now before Parliament. This will help reduce pressure on the government as it will allow for joint venture partnerships and opportunities to leverage on private sector financing.”

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