A FORMER World Bank official has advised the government to diversify the economy on the back of firm commodity prices, saying the mining sector alone would not pull the country out of poverty.
Addressing delegates at the High Level Technical Dialogue on Zimbabwe Growth Recovery in Harare on Wednesday, Alan Gelb, the former director of development policy at the World Bank and chief economist for the bank’s Africa region, urged the government to put in place measures which will increase output of the capital-intensive industry as a way of encouraging forward linkages with other sectors.
He cited the case of copper-producing Chile as an economy that had managed to effectively leverage on mineral resources.
The Centre for Global Development fellow said Zimbabwe could spur growth for tourism and agriculture anchored on a buoyant extractive industry.
“Minerals alone will not make Zimbabwe rich,” Gelb said.
“There is need to leverage mineral resources to diversify and take advantage of the mineral cycle.
“Zimbabwe is not the only fish in the sea as far as mining is concerned.
“The real challenge is to develop the political consensus and institutions to manage resources well.”
Zimbabwe has the second known largest platinum deposits in the world.
The contribution of mining to the gross domestic product has grown from an average of 10,2% in the 1990s to an average of 16,9% from 2009 to 2011, overtaking agriculture. In his 2013 Budget, Finance minister Tendai Biti said mineral exports rose by 230% over the 2009 to 2011 period, making mining the leading export sector. By end of 2011, mineral exports accounted for 47% of total exports, led by platinum (43%), gold (28%), and diamonds (20%).
Biti said the mining sector was this year hit by slackening international mineral prices, particularly from the second quarter, on the backdrop of the slowdown in global economic activity.
As a result, growth in the sector is expected to retreat from 25,1% in 2011 to 10,1% in 2012, Biti said.
“However, the anticipated recovery of mineral prices, coupled with on-going investment in the sector as well as the resumption of production of nickel and asbestos in 2013, will see growth rebound to 17,1%,” he added.