adminKudzanai Gerede
Zimbabwe, through its Finance and Economic Planning ministry has projected a 2,5 percent growth rate for the current year buoyed by mainly productive sectors of agriculture, mining and manufacturing, as illustrated by Minister Patrick Chinamasa. In his 2016 National budget the Minister has put in place several interventions to propel productivity in the aforementioned pillars of the economy with the intention of revamping productivity for the economy to kick start.
The Agriculture sector has however been already compromised following the declaration by President Mugabe that the 2015/16 agricultural year was a state of disaster and the national agricultural output is expected to be heavily subdued following erratic rains across the country.
The national cattle herd has suffered the full wrath of the drought situation with over 20 000 cattle feared dead since the dry season last year.
These factors point to a poor agricultural performance for 2016, as cattle ranchers and maize crop growers will have little to offer the market, not to mention contributing to the export basket.
According to Zimbabwe Economic Analysis and Research Unit (ZEPARU) latest statistics Zimbabwe’s export basket has remained pretty much the same for a couple of years regardless of international price variations.
It shows lack of diversification in the productive sectors of the economy.
During the past 5 years, Zimbabwe’s top 5 exports have been consistent only varying in figures of production output.
In 2015 the top 5 export products were mainly from the extractive sector with the exception of tobacco which apparently became the leading export product constituting 31,84 percent of total exports.
Other top export products were gold (22,48%), various ores and concentrates (8,59%) ferro-chromium (5,92%) and diamonds constituting 6,69 percent on export composition.
These statistics highlight characteristics of a concentrated economy in dire need for diversification.
This has created enough space for external products to dominate the local market whilst meeting demand of other products which are not being offered by the local productive sectors.
The notable absence of the manufacturing sector products on the country’s list of top export basket is not sustainable.
According to ZIMRA, Zimbabwe in 2014 spent US$ 469 million importing vehicle from different countries across the globe at a time when the capacity utilisation for local car assemblers is below 50 percent.
Exports of vehicles by local car assemblers should be significant on the country’s export basket once firms like Quest Motors and Willowvale Car assemblers are recapitalised and capacitated to remain viable.
Analysts have attributed the influx of import products on the domestic market due to lack of serious efforts to implement measures to revamp the manufacturing sector hence diversifying out production out.
Despite that the country is endowed with an array of mineral composition, the over reliance on the extractive sector as a key economic pillar has serious economic ramifications. This has been a sad case prevalent across much of the African continent considering the volatility of the extractive sector prices for commodities.
Currently prices of major minerals have plummeted to record levels on the global market and this has translated in lower than expected revenue inflows for most extractive sector based economies like Nigeria, Angola and Libya among other concentrated economies who have succumbed to crude oil price slump.
Locally, this has left the economy vulnerable to risks and shocks as evident during the past year following the release of the State of the Mining Industry report done by the Zimbabwe Chamber of Mines recently.
According to the findings of the survey, mineral output for the past year was in the red recording a -2,5 percent growth from the highs of 11,7 percent mineral output in 2013.
This saw the sector contribution to national exports plummeting to 50 percent from the previous year’s 56 percent and posting a 9 percent contribution to Gross Domestic Product.
A prominent critic of lack of diversification from the extractive sector by most African economies Zimbabwe resident representative for UNDP economic advisor Mr Amarakoon Bandara last year expressed his reservations on the dependence on the extractive sectors by most African economies.
Mr Bandara noted that while most extractive sector based African economies were posting high GDPs consisting of over US$ 50 billion annually, this has not translated into better livelihoods for its populace as the extractive sector does not relate to the needs of the African people. Very few are skilled in this high-tech sector hence few benefit from it whether through employment or other by any other means.
A British magazine , The Economist, reported in 2014 that Angola was “still much oily” because oil provides few jobs and due to the failure by its government to create a non-oil economy, the oil industry employs less than 5 percent of Angolan jobs yet its earns the country over US$ 60 billion annually.
In the Zimbabwean context, the population is dominantly rural and in the emphasis on mining is alien to most of its social and economic setup.
Lean export product basket is also detrimental in the country’s capacity to lure investment across a broad spectrum of economic activities. Investors tend to shy investing in areas which indigenous businesses do not operate in.
As the Government continues to open up space for external investment, analysts have called on government to seriously consider broadening the scope of economic opportunities for investment. With the world having become technologically driven, emphasis should be put on opening up opportunities in the science and technology sector as the case with the recent STEM program.
This has been successful in other regional countries such as Kenya and Uganda who have embraced the modern technology by investing in its human resources such that global telecommunications giants like Samsung and Microsoft. The global firms have also complemented these initiatives through massive investment which have seen the East African horn become the region’s technological hub.
Online Reporter