Zim economic recovery hailed

on the Government to consolidate the gains achieved thus far to ensure the economy reaches its full potential.
AfDB president Mr Donald Kaberuka said this on Tuesday during the two-day Zimbabwe Investment Conference, which ended in Harare yesterday. The Indaba, co-hosted by Euromoney Conferences and the Government of Zimbabwe, sought to unlock foreign investment.
Mr Kaberuka said since the formation of the Inclusive Government in February 2009 hyperinflation had been tamed and fiscal discipline restored. This, said the AfDB boss, showed that the country’s potential as the second engine for economic growth in Sadc region, was still vastly high.
He said for the first time in a decade Zimbabwe had not only reversed economic decline, but is moving forward economically despite many challenges.
“It shows the potential of Zimbabwe, the resilience of its people and this points to how far it can go if (the right) conditions are in place,” said Mr Kaberuka.
The economy rebounded from decline to post successive growths of 5,7 percent and 8 percent in 2009 and last year respectively.
Finance Minister Tendai Biti has projected the economy will expand by 9,3 percent this year. Annual inflation closed at 5,4 percent in 2009, further declining to just 3,2 percent last year and is expected to be about 5,4 percent by the end of the year.
The AfDB president said after restoring macro-economic stability most economic indicators changed from red to yellow and should move to green.
“Economic prospects are brighter, key sectors such as mining and agriculture are responding, exports have increased, while the balance of payments improved significantly in 2010,” said the AfDB president.
To show its confidence in Zimbabwe Mr Kaberuka said AfDB had recently opened its Harare office and was working with Government on the debt issue, which will pave way for re-engagement.
The international community has also tasked the bank with the management of the multi-donor trust fund for Zimbabwe, which AfDB said showed confidence in the bank and quality of its relationship.
The fund is seized with providing initial critical investments for the power and water sectors, recovery of agriculture, providing technical support, capacity, public finance and debt management.
AfDB said despite the complexities the Government faced stability-political and economic-policy predictability, clarity on property rights, certainty and low cost of doing business were key for attracting investment. The regional bank, however, said the country had not invested in infrastructure in the last decade and required significant funding to address this.
An assessment that AfDB conducted in January at the request of Government established that Zimbabwe needs US$14 billion to rehabilitate and expand infrastructure to meet demand in the next decade. In light of financial constraints Government faced, AfDB suggested a combination of donor assistance, parastatal and private sector interventions
Speaking at the same event Minister Biti said sorting the political issues of the country and strict adherence to macro-economic rules were critical to maintaining the economic gains and sustain future growth.
He also said the country need to urgently address its shortcomings in terms of infrastructure such as power, water and sanitation to keep growing. To that end, he said the country would need at least US$4,5 billion to fund one of the most promising thermal power projects in Gokwe North. He said water and sanitation require an estimated US$3,5 billion.
In a bid to close the technology gap between Zimbabwe and the rest of the World, Minister Biti said the Government allocated significant amounts to connect the ICT backbone to undersea cables in Mozambique.
The Finance Minister also said total resolution of the country’s US$7,1 billion debt overhang was critical as that was standing in the way of external credit. He said World Bank disbursed US$39 billion between 2009 and 2010, but Zimbabwe did not benefit due to the country’s huge debt obligations.
Minister Biti also added the Government was looking to keep directing most of the limited resources to social services in a bid to raise local per capita income.
He said the country’s per capita income was presently perched at US$300, but would seek to raise this to between US$800 and US$1 200 in three years.
This would be achieved through continued investment in education and health. He said the country was ready for and required significant foreign direct investment.