Economic highs, lows of 2011

Arguably one of the most important highlights was the promulgation of the Indigenisation and Economic Empowerment Act to empower the black majority by giving them a stake in economic sectors such as mining and manufacturing.
Another major high was the launch of the Zimbabwe Investment Authority as a fully fledged One-Stop Shop investment centre.
Under the Indigenisation and Economic Empowerment Act, all foreign owned entities with a net turnover exceeding $500 000 operating in Zimbabwe should cede 51 percent shares to locals in order to address the economic disparities that existed in the country as a result of colonialism.
As a result of the Act, the Government made milestone achievements in trying to implement the empowerment programme.
The National Indigenisation and Economic Empowerment Board (NIEEB), created to oversee the implementation of the empowerment process and to warehouse shares on behalf of the indigenous people, said all mining houses had finished submitting their Indigenisation plans with only a few isolated cases of firms failing to comply with the statutory instrument.
The Government also launched Community Share Ownership Schemes in areas with mining activities to ensure local communities received a 10 percent stake from natural resources in their respective areas.
In addition, through the Employee Share Ownership Scheme, workers are supposed to own between five and 28 percent of shareholding in their respective companies.
Under the empowerment programme, NIEEB established an empowerment fund that will provide financial resources for business start-ups and finance capacity building projects on behalf of indigenous Zimbabweans.
The Government launched the Zimbabwe Investment Authority (ZIA) as a fully operational One-Stop Shop investment centre in January.
In June 2010, ZIA partially implemented the one-stop concept meant to streamline the activities of the authority and reduce bottlenecks in investment.
The functioning of ZIA as a full one-stop concept meant that the time for approval of investment projects was reduced from 49 days to less than five days.
Zimbabwe is also in the process of introducing an investment tracking system to monitor progress in the implementation of investment projects in the country.
The tracking system which will not be peculiar to Zimbabwe alone has also been adopted by countries such as Kenya and Rwanda to identify sources and types of investments, the revenue and jobs generated from the projects as well as identify the major markets.
In a deal that will revive a dying steel giant, the Government and a Mauritian company, Essar Africa in March signed the long-awaited $750 million deal to resuscitate operations at Zisco (now New Zimbabwe Steel).
However, the actual steel production is yet to begin as Essar that now owns a 54 percent stake in the steel producer and Government are still engaged in discussions to finalise a number of issues.
Once production at New Zimbabwe Steel resumes, more than 7 000 people would be employed.
In May, an eight-member Inter-ministerial Taskforce on Let Bulawayo Survive Campaign was established by Cabinet to investigate the challenges that led to the demise of industries in the city.
The taskforce, chaired by Industry and Commerce Minister Professor Welshman Ncube, recommended to Cabinet an urgent need to release funds to recapitalise industries in Bulawayo.
As a result, in September $40 million under the Distressed Industries and Marginalised Areas Fund was unveiled to bail out ailing Bulawayo firms.
However, because of disagreements among stakeholders on the disbursement modalities, the resources are yet to be released.
The Government also launched the Medium Term Plan, an economic blueprint to anchor the country’s economy for the next five years.
It is hoped that the MTP would promote economic growth with the aim of eliminating economic challenges faced by businesspeople.
Through this policy, Zimbabwe’s Gross Domestic Product is expected to be on a positive growth trajectory with the economy expected to grow by 15,4 percent in 2015.
The plan also estimates that poverty levels would be drastically reduced while a decrease in the number of people living below the Poverty Datum Line is also anticipated during the five-year period.
One of the milestone achievements in Zimbabwe’s economy was the approval by the Kimberly Process and Certification Scheme (KPCS) that gave the country the nod to export its diamonds without external influence.
It is hoped that the development will go a long way in improving liquidity into the economy.
At the moment, Zimbabwe’s bank deposits are said to be between $2,5 billion and $2,7 billion.
In the 2012 national budget presentation Finance Minister Tendai Biti announced a $3,4 billion budget and announced that an additional $600 million to support the fiscal policy would be sourced from Marange diamond sales.
Capacity utilisation in the manufacturing sector, according to the Confederation of Zimbabwe Industries, has increased from an average of 40 percent at the beginning of the year to 59,2 percent.
The improvement comes on the back of improved power supply and liquidity in the economy.
During the course of the year, stakeholders also launched the Buy Zimbabwe Campaign, which seeks to promote the usage of local products in face of imported commodities that flooded the market as a result of low productivity in industries.
However, despite the aforesaid notable developments in the economy in 2011, Zimbabwe is still faced with the liquidity crunch.
Credit lines and Foreign Direct Investment has not been forthcoming the way businesses would have wanted in order to stimulate productivity in the manufacturing sector.
Power supply has also remained a major challenge in the country.
Zimbabwe, which has a national demand of 2 200 Megawatts, produces about 1 600MW.
Industries are still operating with antiquated machinery and thus rendering the equipment uncompetitive in face of state of the art technology from other countries.
Despite the challenges facing the economy, Zimbabwe is poised to record a 9,3 growth rate this year while at the same time maintaining single digit inflation.
Finance Minister Tendai Biti has projected that the country’s inflation will not exceed 4,5 percent by the end of the year.
Last month Zimbabwe recorded an inflation rate of 4,2 percent with economic analysts saying the country was within the range of containing inflation so that it does not exceed Government’s target.