ZIMBABWE’S productive sectors recorded some positive growth in the first quarter of 2018, spurred by renewed investor confidence under the new dispensation, despite a persistent strain induced by foreign currency shortage, a recent Treasury report shows.
Manufacturing, mining, agriculture, tourism and finance sectors are among the key segments that have shown signs of growth during the period with more positive prospects ahead. Sectoral growth in manufacturing, for instance, is being anchored by sub sectors such as foodstuffs, tobacco, textiles and ginning, clothing and footwear, paper, printing and publishing, as well as non-metallic minerals products. These have “registered some positive performance” during the first quarter of 2018.
“These subsectors are benefitting from implementation of reform measures under the Ease of Doing Business reforms aimed at improving industry competitiveness and the renewed investor confidence,” reads part of the report.
According to the report, macro-economic developments during the first quarter of 2018 point to improved economic performance in most sectors of the economy, with some gains in capacity utilisation, bolstered by positive sentiments coming from the industrialists. However, shortage of foreign currency remains a major obstacle to sustained growth of business operations.
The manufacturing sector has also seen the commissioning of new manufacturing plants during the first quarter of 2018, including the $3.5 million Splash Paints and Plastic plant, $30 million Pepsi Plant, among other new investments.
“However, the potential of the manufacturing sector is constrained by liquidity and viability challenges, as well as foreign exchange shortages required to import new equipment for re-tooling and critical raw materials,” said Treasury.
The country’s real economic growth is projected at 4.5 percent in 2018, up from an estimate of 3.7 percent for 2017. The positive outlook is set to be buoyed by the positive performance in agriculture (10.7 percent), mining (6.1 percent), electricity (28.5 percent), as well as distribution and restaurants at 7.5 percent.
The coming in of the new dispensation last November marked a new era under which key reform initiatives and commitments are being implemented on rebuilding and transforming Zimbabwe to become an upper-middle income economy by 2030. In particular, the ongoing reform initiatives are aimed at creating a conducive macro-economic environment for increased investment and growth through improving the ease of doing business, advancing the re-engagement with the international community, as well as addressing a number of fiscal challenges and other structural rigidities in the economy.
President Mnangagwa’s Government is providing growth impetus, which, however, is being weighed down by the shortage of foreign currency for the importation of critical raw material for production, as well as the late onset of the rains during the 2017/18 agricultural season. The Treasury’s Bulletin further gives an outline of the performance of the economy during the first quarter of 2018, following the presentation of the 2018 National Budget in December 2017.
The mining sector has also registered huge strides as evidenced by growth in output and exports receipts. Most minerals are expected to record increased output in 2018, compared to 2017, owing to improved power supplies, funding and retooling by some of the big mining companies. According to treasury, about 90 percent of mining firms are planning to increase output by more than 10 percent, thanks to increased investment in new equipment.
The agriculture sector is also projected to grow by 10.7 percent. The growth is on account of coordinated funding interventions by Government and the private sector, says Treasury. The tourism sector is on the mend too as shown by growing arrivals and subsequent increase in room occupancy rates in major destinations.
During the period, Treasury notes that electricity supply from the country’s main stations recorded a slight improvement, with total electricity generated amounting to 1,649.55 GWh against the 2017 outturn of 1,610.32 GWh. Revenue collections for the first quarter of 2018 were also above target, while expenditures incurred overruns in both the recurrent and capital outlays. Improved domestic productivity is expected to bolster exports and reduce the trade deficit.