Chinamasa forecasts: Fact or fiction?

FINANCE minister Patrick Chinamasa yesterday presented the US$4,1 billion 2014 national budget,optimistically projecting a 6,1 % growth rate, up from 3,4% this year.

Kudzai Kuwaza

Chinamasa said the projected growth rate was premised on the recovery of major sectors such as mining and construction.

“In 2014 the economy is, however, projected to record strong growth of about 6,1%, premised on an active  Zimbabwe Agenda for Sustainable Socio-Economic Transformation programme policy scenario anchored on strong recovery of  agriculture and improved performance of mining and construction sectors,” he said.

The minister gave what appeared to be unrealistic projections considering the numerous challenges  he admitted which include high consumption leading to negative domestic savings and  exposing the country to rely on external savings, liquidity constraints reflected in declining money supply growth and high debt overhang resulting in limited and highly priced lines of credit.

Other challenges he pointed out include limited external inflows in the form of foreign direct investment, food insecurity owing to low productivity, lack of industry competiveness due to obsolete equipment and outdated technology as well as financial sector vulnerabilities stemming from weak governance, low interbank market activity and high non-performing loans.

Chinamasa projected a 9% growth for agriculture next year buoyed largely by growth in crops that include maize, cotton, soya beans and groundnuts.

He added that the improved state of preparedness, sustainable planned financial arrangements and inputs availability would support the anticipated growth in the sector.

Chinamasa sees an increased cotton production from 14 000 tonnes this year to 18 000 tonnes in 2014, underpinned by an anticipated increase in local demand.

In his budget statement, he projected  11,4% growth for the mining sector anchored by planned investments and largely driven by strong performance  in gold, diamonds, nickel and coal.

He said platinum production is set to grow by 8% from 13 000 kgs in 2013 to 14 000 kgs in 2014.

Gold production, he added, is projected to increase by 7,1% from 14 000 kgs this year  to 15 000 kilogrammes next year.

Diamond output would next year increase to 12 million carats helped by the recent removal of the Zimbabwe Mining Diamond Corporation from the sanctions list by the European Union, he said.

Chrome production would increase from 360 000 to about 500 000 tonnes next year on the back of the installation of a new high-tech sintering plant by Zimasco that will result in the transformation of chrome fines into lumps which can be processed by existing furnaces.

The ramping up of coal production by a new player in the sector, Makomo Resources, is expected to increase output of the mineral from an anticipated 3,3million  tonnes this year to 4 million tonnes next year.
Chinamasa said the operationalisation of the stalled Zisco/Essar deal would improve activity in the metals and metal product sector.
The manufacturing sector, which has largely been subdued with capacity utilisation reduced from 44% last year to 39,6% this year, is expected to register moderate growth rates of 1,5% and 3,2% in 2013 and 2014  respectively. This would be driven by the foodstuffs, tobacco and beverages sectors, according to Chinamasa.
On tourism, the sector’s contribution to the economy was currently at 10% and could potentially grow to 15% by 2015, with the sector expected to grow by 3,4% this year. Chinamasa projected hotel room and bed occupancy levels which were currently around 59% and 41% respectively would grow to 61% and 42 % respectively.
He projects electricity generation next year will grow by 4,5%, spurred by the rehabilitation programme at Hwange and the coming on board of small power stations. The country continues to endure debilitating power cuts as it is currently generating about 1 167 megawatts of power against a demand of 2 200 megawatts.
Generation would also be supported by improved revenue collection from the on-going programme of installation of pre-paid meters, with the sector expecting a 4,2% growth this year. Chinamasa also said the construction sector, which had an estimated growth of 10% this year due to the construction and upgrading of resort facilities for the United Nations World Tourism Organisation general assembly held in Victoria Falls in August as well as government’s infrastructural development programmes, was projected to grow 11% next year.
The growth would be underpinned by public and private housing projects, the on-going government’s infrastructure programmes as well as the expected positive growth in other sectors such as mining, manufacturing and agriculture.
Chinamasa projected growth in the Information Communication Technology sector of 4% driven by product development and innovation. Data and internet services were anticipated to be the major revenue drivers in the sector reflected by a major investment shift towards expansion of broadband fibre network.