Industry has indicated that the average economic growth target of about 5% for the next four years set by President Emmerson Mnangagwa’s administration looks ‘unimaginably ambitious’, Business Times can report.
In its economic blueprint, the National Development Strategy (NDS1), the government set a target of taking the economy to ZWL$65bn by 2030. By then the government hopes Zimbabwe will be an upper middle income economy in nine years’ time.
Captains of industry said the target appears exceptionally daunting as there are several dark clouds over the economy which need to be cleared. They include the rising trade tensions over acute shortage of foreign currency, rocketing exchange rate, crippling power cuts and high inflation.
The Confederation of Zimbabwe Industries president Kurai Matsheza told Business Times the target was ambitious and there was a need to address current challenges to grow the economy.
For the growth to occur, Matsheza said, the government needs to deal with currency and macroeconomic instability, policy inconsistences, improve the business operating environment to attract investment, among many other solutions.
“…..(It) can only be realised through a rapid industrialisation strategy that moves the economy away from low income primary production to high income value addition and beneficiation of minerals and agriculture commodities,” Matsheza said.
“There is need to restore the manufacturing sector’s contribution to GDP to about 30%, creating additional high-income employment in the manufacturing sector, increasing capacity utilisation in all sub sectors of industry, re-equipping and replacing obsolete machinery and new technologies for import substitution and enhanced value addition.”
Finance and Economic Development Minister, Mthuli Ncube, is however, bullish about the prospects saying: “We are quite aware of the challenges that the country is facing but our game plan is to grow the economy at an average rate of 5% for the next four years then accelerate in the last five years on the run up to 2030 to achieve our set goals.”
Ncube added: “We stand guided by the National Development Strategy (NDS1) where we are addressing each challenge one by one and march towards our target.”
Presenting the 2022 National Budget, Ncube said the economy will grow by 5.5% next year powered by decelerating inflation and higher mineral output.
However, the 2022 gross domestic product (GDP) growth rate announced in the national budget will be much lower than this year’s 7. 8% projection.
This year’s growth rate increased at a higher rate compared to that of 2020 when economic activity was battered by pandemic-induced lockdowns, which grounded key sectors including tourism and manufacturing.
Ncube is also optimistic that inflationary pressures would continue declining, averaging 32.6% during 2022.
He projected a year-end annual inflation rate of about 20%.
The Zimbabwe National Statistics Agency said the inflation rate for November was 58.4% from 54% in October, owing to rocketing prices of basic commodities and currency fragilities.
However, the rate is much lower than the 471.3% of October last year.
Further growth is projected in the manufacturing, agriculture, construction and tourism industries, which have been recovering from Covid-19-induced lockdowns.
Ncube said growth projections were also premised on assumptions that the 2021/2022 agricultural season would be normal.
He projected that Covid-19- induced hard lockdowns would not inflict further damage to industries next year, possibly as a result of the vaccination campaign, while a stable exchange rate would cool off current jitters.
“Potential risks to the above projected growth include the uncertainty in the future path of the pandemic and exchange rate volatility, which may contribute to high inflation,” Ncube said.
“Other risks relate to underperformance and viability of some of the State-owned Enterprise (SOEs), extreme weather conditions, retreats in international commodity prices and higher than anticipated international oil prices.”