Following recent changes to cabinet, including the appointment of two new vice-presidents and seven cabinet members, is Zimbabwe poised for a watershed year in 2015 or will it be more of the same?
The Ritesh Anand Column
President Robert Mugabe last week announced significant changes to government in the aftermath of the ruling Zanu PF’s congress. With party politics now placed to one side, can government focus on things that really matter to ordinary people? Will the focus be turned to the economy, investment, job creation and economic development?
The current situation is that Zimbabwe faces significant headwinds as the global economy slows and commodity prices weaken further. Last week I dealt with the dramatic fall in oil prices and the impact that it is likely to have on Zimbabwe.
These positive effects could be offset by a weaker commodity prices. Government has the opportunity to turn the economy around, but requires significant focus, dedication, commitment and energy.
The new ministers certainly have their work cut out as Zimbabwe’s economy sinks gradually into recession. The key challenge for 2015 will be the economy. Over the last three years economic growth has waned and Zimbabwe risks slipping into a recession in 2015.
While I believe that the government’s economic blueprint, ZimAsset, is a good long-term investment plan, what Zimbabwe needs is a short-term economic recovery plan. In the short-term, Zimbabwe needs to focus on turning the economy around and restoring business confidence.
We need to find ways to stimulate growth and economic activity. This means we need to develop strategies to boost investor confidence. The year 2015 could easily be a watershed year for Zimbabwe if we shift the focus away from politics and turn our attention instead to the economy and restoring international relations.
Key targets for 2015 should include:
Target 6% to 8% GDP growth annually over the next five years;
Target over US$1 billion annually in foreign direct investment over the next five years;
Restore domestic and foreign investor confidence;
Policy clarity, consistency and predictability to attract investment long-term capital;
Restore relations with international creditors and investors especially in the West;
Mineral development strategy: in light of falling commodity prices, Zimbabwe needs to think carefully about the mining sector. I suspect a number of mining companies will fail in 2015 if mineral prices continue to fall especially in the gold sector.
Government should focus on mining development as well as making existing mines more efficient. This includes attracting investment in new equipment and technology to lower costs;
Financial sector stability: this includes restoring confidence in the central bank, consolidation in the banking sector, especially among weaker local banks;
Reducing the trade deficit: government needs to focus on export development while containing imports. This can be achieved through encouraging investment in export-related sectors through the establishment of Special Economic Zones as well as providing export incentives for existing companies;
Debt strategy: government needs to think carefully about how best to deal with Zimbabwe’s outstanding debts. The first step would be to settle it’s debt of around US$142 million with the International Monetary Fund (IMF). This will allow for greater support from IMF and provide the platform for a more comprehensive debt solution;
Commitment to multi-currency system: government has so far remained steadfast in its commitment to maintaining the multi-currency regime.
Despite recent speculation following the introduction of bond coins, there is no reason to believe that government would consider bringing back the Zimbabwe dollar. History suggests that it is very difficult for a country to go back to a local currency post-dollarisation. I will dedicate an entire column to this debate next year as well as explore the options;
Clarity and transparency on indigenisation: There is need to rebrand/repackage the indigenisation policy to make it more user-friendly and/ or acceptable to foreign investors. We need to simplify the plan and provide greater transparency and accountability; and
Sensible investment policy: Zimbabwe desperately needs a sensible investment policy. I have talked about this a number of times. We need to develop an all-embracing investment policy and create a favourable environment for investment. We need to respect property rights and focus on rebranding Zimbabwe as a safe destination for investment.
This requires significant political will and commitment.
We all know that Zimbabwe has tremendous potential and many Zimbabweans both at home and abroad have waited patiently for a better future. We owe it to ourselves as well as future generations to build a better future for Zimbabwe.
Government has a responsibility to assist its people in realising their dreams, hopes and aspirations. Next year could well be a watershed year for Zimbabwe, if and only if, there is greater focus on the economy.