adminequipment into the mining sector in 2011 amounted to US$502 million. The amount is still far below the sector’s requirements. The mining sector requires US$ 5 billion in order to increase capacity utilisation to 80 percent in the next three to five years, according to Chamber of Mines.
The sector, however, has been performing below its potential. Its current contribution to the GDP averaged 4,2 percent. Skewed macroeconomic policies which included extended periods of overvalued exchange rate and unsustainable foreign exchange surrender requirements at 75 percent, adversely affected investment in the mining sector.
Just to simplify how the sector performed over the past year, gold production peaked from 11 444 kilogrammes in 1980 and grew at a steady rate to 27 114 kilogrammes in 1999. From 2000 to 2008 gold production witnessed dramatic plummeting owing to the pervassive economic downturn which ensued.
In 2008, Zimbabwe produced a meagre 3 579 kilogrammes of gold. The downward trend was reversed in 2009. However, gold annual output is still far low to reach the yester-years glory. The trend in gold production is synnonimous with other minerals.
The trend is synonymous with other minerals such as chrome. Chrome production peaked from 555 475 tonnes in 1980 to 780 150 tonnes in 2007.
Chrome production fell sharply from the 2007 peak to 193 673 metric tonnes in 2009. Coal output was 3,13 million tonnes in 1980 and rose to 5,61 million tonnes in 1991.
It fluctuated at the same level for almost a decade and the fell to 1,67 million tonnes in 2009.
Zimbabwe has failed to benefit from commodity boom, which has seen international prices of metals firming up.
However, the mining sector has the capacity to sustain double-digit growth but is faced with a number of challenges that impede its faster recovery.
The key challenges facing the sector are frequent power outages; shortage of funds for working capital and recapitalisation; skills flight; dilapidated and inefficient infrastructure.
Mining continues to lose production time through unscheduled electricity outages, as the country grapples with power shortages compounded by the regional energy demand that far outstrips supply. There is no immediate solution to these challenges!
Economic Infrastructure
Economic infrastructure is a key enabler of economic development. The past decade’s protracted economic decline negatively impacted on Zimbabwe’s infrastructure rehabilitation and improvement efforts. Over the years there was very little or no new infrastructure related investments at all.
Infrastructure maintenance was also limited to what was necessary to keep the essential parts of the service delivery system going.
As a consequence this has caused frequent breakdowns, shortages and the general decay of the country’s infrastructure. Potholes, for example, are now a characteristic feature of all the country’s urban roads, whilst rural ones are now virtually impassable. Also uncollected garbage and raw sewerage flowing in the streets has become another defining feature of the country’s urban landscape and power outages have become the order of the day.
The overall effect of the decline in the state of the country’s infrastructure is that it has also resulted in severe adverse economic and social effects that are currently stifling the country’s economic recovery prospects.
Zimbabwe needs at least US$14,2 billion on infrastructure development alone for the next decade to create an enabling business environment that will see the economy producing competitively.
To sum up, Zimbabwe helpless annual budget of US$4 billion is by far inadequate to address these economic challenges. A quick reveal of Zimbabwe financial requirements shows that she need urgently:
l US$14,2 billion for infrastructure alone;
l US$5 billion on mining sector alone;
l US$2 billion on manufacturing sector alone;
l US$2 billion on agricultural sector alone;
l US$8 billion on national debt
l US$1,5 billion on current account deficit.
These numbers add up to US$32,7 billion excluding other pressing issues such as electricity and food imports. This is a mammoth task for the country.
Looking at the current policy options which the country has through the Medium Term Plan, fiscal policy, trade and industrial policy there is no light that we can reverse this picture.
Zimbabwe cannot expect much from World Bank and IMF. Instead, these institutions expect the country to settle its arrears with them. The only way out here is to use our resources through the sovereign wealth fund.
l Gift Mugano is a trade expert based in Port Elizabeth, SA. He is studying for a PhD in Economics at Nelson Mandela Metropolitan University. He is a lecturer of Applied Business Analysis in the Graduate Business School at the NMMU, Consultant and Chief Executive Officer of Africa Economic Development Strategies. Feedback: gmugano@ yahoo.com, cell: +2778 017 4112
Peter Tanyanyiwa
Online Reporter