The Sunday News
Zimbabwe’s economy heads into 2015 in a rather fragile state, but economic analysts are optimistic that its fortunes can be turned around on the back of effective implementation of key strategies and policies in the medium-term.
Although the past year has seen the local economy experiencing a structural regression, coupled with an acceleration of de-industrialisation and informalisation of the economy, analysts say resolution of these problems lie in the country’s ability to re-capitalise industry and fund critical infrastructure projects.
Economic analyst Trust Chikohora says improving the country’s doing business environment will help activate foreign direct investment (FDI) inflows.
“I maintain that the solution can only be found in being able to attract FDI as well as balance of payments support, development assistance, lines of credit and revamping tourism among other issues,” he said.
According to statistics from the Confederation of Zimbabwe Industries (CZI), FDI continues to be depressed as the percentage of manufacturing firms who carried new capital investment through FDI remained at a very low 5 percent.
“Other issues include good national and corporate governance, and there will also be no substitute for sheer hard work. We also need to be smarter and come up with our own sustainable competitive advantage as a country and leverage on it to be competitive in the global market place. We just have to accept that we live in a global village and act accordingly in a manner that gives us best competitive advantage,” said Chikohora.
The private sector needs Government assistance in terms of improving the macro-environment, and indicative of that is the fact that starting a business in the country is still a cumbersome, expensive and long-drawn-out exercise. In that respect, and at a macro-level, the Government recently tasked an Inter-ministerial committee to look into issues affecting business and industry, and those outcomes which focused on the following areas: labour; power water; finance; transport and trade logistics; tariffs and trade taxes; taxation and information technology , will give positive economic policy guidance in the outlook.
It is largely expected that once operational environment becomes conducive, the country should be able to attract increased FDI which is currently very low compared to regional averages.
BancABC group economist James Wadi told BH24 that industry revival should be the main priority in the new year.
“The solutions to our problems is to focus on turning around our local companies. The local companies need to start producing once again. While Government has gone out of their way in terms of cushioning some of the companies through the use of tariffs, it appears like a number of companies need more than protection.
“The majority of these companies are in a fix. In as much as they need working capital facilities, they also need to re-finance some of the more expensive debt which they are sitting on. This means, access to cheaper funding to retire the expensive debt which was acquired when interest rates were punitively high,” he said.
“Increased efforts to source cheaper external sources of funding should also remain a top priority.”
Finance and Economic Development Minister Patrick Chinamasa has over the past year made concerted efforts to re-engage with bi-lateral and multi-lateral lenders, with one key outcome being the launch earlier this week of $44 million multi-donor fund – Zimbabwe Reconstruction Fund (ZimRef) – for new and ongoing investment projects, which is expected to swell to $100 million in 2015.
Meanwhile, the International Monetary Fund (IMF) approved a successor Staff Monitoring Programme for Zimbabwe, aimed at strengthen the country’s external position, as a prerequisite for arrears clearance, resumption of debt service, and restored access to external financing.
So there is light at the end of the tunnel, depending on how the Government effectively implements the requisite economic policies. – BH24.