HomeBusiness DigestPoor governance causing Zim's economic slowdown

Poor governance causing Zim’s economic slowdown

Ngoni Chanakira

THE International Monetary Fund (IMF) says among the most common causes of economic slowdown in Zimbabwe are mismanagement and poor governance.

rial, Helvetica, sans-serif”>The Washington-based organisation says economic performance in many African countries however continues to improve but achievement of the Millennium Development Goals is at risk.

In a brief on the outlook for sub-Saharan Africa, IMF African Department director Abdoulaye Bio Tchane said on the brighter side as many as 21 of sub-Saharan Africa’s economies were expected to grow at rates of 5% or more this year, which would be an eight-year high.

He said real gross domestic product (GDP) for the region was expected to average a robust 4,2% – a rate not seen since the mid-1990s.

“For much of the region however forecast growth will still fall short of the 7% needed for Africa to achieve the Millennium Development Goals,” he said.

Tchane said among the most common causes of this slowdown were drought, notably in Ethiopia, Guinea, Mali and Rwanda, conflict in Burundi, Central African Republic, Republic of Congo, and Ivory Coast.

He said lower oil production in Angola and the Democratic Republic of the Congo and “economic mismanagement or poor governance in Seychelles and Zimbabwe” were also causes of the economic slowdown.

“Indeed, conflict, civil strife, drought and poor domestic policies continue to be clearly evident in those countries experiencing the poorest growth,” he said.

“As in the past, the regional average masked diverse performance among individual countries and country groupings. While real GDP growth in sub-Saharan Africa’s oil-producing countries increased to an average 8,7% in 2003, the average for non-oil economies slowed from 2,9% to 2,1%.”

He said among the non-oil economies, slower growth last year primarily reflected the outturn for South Africa, the region’s largest economy.

South African GDP growth slowed to 1,9%, from 3,6% in 2002, largely because the effects of the rand’s appreciation on net exports, continued to be the main driving force behind growth in the non-oil economies.

Last month the IMF anticipated that Zimbabwe’s GDP, which has been on the decline since 1999, would record a 5,2% positive growth, up from a decline of -9,2% this year.

Since March the IMF has warned that this year the GDP could shrink even further.

Over the past five years, the country’s GDP has contracted by about 30%.

Tchane said there were a number of cases in which countries facing the same external environment were having very different outcomes.

“Five of the fastest-growing sub-Saharan African economies during the past five years – Benin, Burkina Faso, Mozambique, Tanzania and Uganda – have all reached their completion points under the Heavily Indebted Poor Countries’ Initiative and are pursuing strong macro-economic and structural reform agendas,” he said.

He said the main challenge facing most sub-Saharan countries remains how to raise economic growth rates substantially and sustainably and make progress towards the Millennium Development Goals.

“This will require substantial increases in investment, including from external sources, as well as a more dynamic private sector,” Tchane said.

“This, in turn, points to the critical importance of improving the business climate, which would entail steadfast commitment not only to appropriate macro-economic frameworks but also to more rapid and comprehensive structural and legislative reforms as well as improvements in governance and participatory process.”

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