The Confederation of Zimbabwe Industries (CZI) says a 10% economic growth rate is a precondition for recovery and sustainability in the aftermath of the July 30 general elections to enable economic resurgence.
By Nyasha Chingono
Zimbabwe last recorded double-digit economic growth — which some analysts say was in real terms recovery not growth — during the Government of National Unity (GNU) formed between the late opposition leader Morgan Tsvangirai and former president Robert Mugabe in 2009, where inflation was controlled at 6% after it peaked to a record 11,2 million percent following decades of corruption and mismanagement.
Industry remains upbeat that the forthcoming elections will create a favourable climate for growth that will see the revival of industries such as ZiscoSteel.
Speaking to businessdigest this week, CZI president Sifelani Jabangwe said a number of areas had been underperforming due to poor linkages between sectors. “We now have specific numbers from our economists and the target growth rate is 10%. We believe there are a number of areas where we are underperforming through poor coordination and poor industrial linkages; these are the areas we will focus on,” said Jabangwe.
“This includes linkages to mining and tourism. Also, there are a lot of advantages in getting the motor trade to operate. A key project that will boost our ability to achieve the growth rate required is the restart of ZiscoSteel. This has a lot of linkages with other sectors such as coal supply and the inbound and outbound logistics that it will stimulate in several sectors.”
While major political players like Zanu PF forecast a 6% growth rate in the aftermath of the July polls, the opposition MDC Alliance has pegged its economic growth rate target at 10% to US$100 billion by 2029.
Although some analysts argue that the MDC Alliance’s economic target is over-ambitious, others believe it is achievable if the growth numbers achieved during the GNU years are anything to go by.
Zimbabwe is currently at the peak of the election campaign season with major political actors eager to charm voters through selling attractive economic policies which have been widely derided as unrealistic. However, the CZI says there is need for clear policy on critical issues affecting industry, such as retooling. “With the introduction of Statutory Instrument 64, that distress diminished significantly, thus we look forward to additional stimulus programmes to further grow the performance of industry, particularly issues to do with additional funding for retooling, as well as working capital,” Jabangwe said.
Industry is currently operating at below 50% capacity utilisation with costs per unit continuing to soar as compared to its regional counterparts, hence rendering Zimbabwean products less competitive.
Rising costs of production have continued to cripple the export market, culminating in the further widening of the current account deficit. The Reserve Bank of Zimbabwe recently revealed that the trade deficit for the first four months of this year stood at nearly US$1 billion.
“Our costs of production are still higher due to the strong currency that we use and also due to other costs such as labour and costs of regulation. These still need to be attended under the ease of doing business reforms,” he said.
Jabangwe said industry had recorded 20% growth during the first quarter of 2018.
“Even with this challenge our members reported a very good first quarter performance with growth in the last quarter being about 20%.We are urging our members to grow exports so as to generate on currency, we hope this will help to alleviate the situation and we also look forward to the country securing fresh lines of credit,” he added.