Uncertainty surrounding the holding of national elections in 2012 and mixed reactions to the implementation of the indigenisation and economic empowerment laws continue to hamper accelerated economic recovery African Development Bank (ADB) has said.
In its January Zimbabwe monthly economic review, ADB said limited external lines of credit have remained stumbling blocks to the countrys economic revival.
The economy is still on a positive growth path. The economy grew by 5,7% in 2009, 8,1% in 2010 and is estimated to grow by 9,3% in 2011. It is projected to grow by 9,4% in 2012, reads part of the report.
However, despite these positive growth prospects, some challenges still persist in the economy. These challenges include, among others, uncertainty surrounding national elections in 2012, mixed reactions on the implementation of the indigenisation and economic empowerment laws, weak domestic demand for goods, external national debt outstanding, limited external lines of credit, high cost of credit, frequent power outages.
ADB said the agriculture sector experienced setbacks in 2011 as indicated by the reduction in the hectarage under maize crop by the end of December last year.
A total of 247 881 hectares were planted at the end of the year against a total of 379 993 hectares that had been planted by December 31 2010.
This shows a 35% reduction in total hectarage. With the average productivity in the country at less than a tonne of maize harvest per hectare, the signals are pointing to a maize deficit in the country, which, once again, may put another strain on the fiscus in terms of maize imports, said ADB.
Hectarage under sorghum and other small grains also declined from 136 131 hectares in the 2009/2010 season to 130 994 in the current season.
For cotton, the land under the crop also declined from 107 727ha in the previous season compared to the current season with 45 000ha.
The bank noted the reduction in total hectarage for all major crops would not have been a cause for concern if there were indications of improvements in productivity.
However, productivity over the years has been on the low side, and coupled with the unpredictable rain season, the seasonal harvest is not looking good, the report said.
The cropping season has also been affected by the Grain Marketing Board (GMB)s failure to pay for grain deliveries made during the year. This has resulted in farmers not being able to acquire inputs in time.
Though the mining sector is expected to grow by 15,9% this year, erratic power supply and lack of long-term funding is inhibiting growth in the sector.
The mining sector requires huge long-term capital.
Limited access to finance the much-needed recapitalisation is limiting the production of minerals and uncertain investment environment characterised by political uncertainty.
In 2011, the mining sector is estimated to have grown by 25,8% with mining exports growing by about 38,7% contributing about half of the exports in 2011.
The leading exports were platinum, contributing 45% and gold contributing 24% of the exports, with diamonds third, contributing 10%.
Turing to inflation, AfDB said the main drivers of annual inflation for December 2011 included communications, housing, water, electricity and gas and the situation was likely to persist this year due to the recent hike in rentals and power outages.
Annual inflation increased to 4,9% in December 2011, from 3,2% in December 2010.