Zim outlook gloomy

THE World Bank has warned that anxiety over Zimbabwe’s forthcoming elections and lack of clarity on the indigenisation and empowerment policy made the economic outlook in the coming year gloomy despite enormous potential by the mining sector to drive the economy.Report by Bernard Mpofu

According to the latest research note released by the multilateral lender at the High Level Technical Dialogue on Zimbabwe Growth Recovery held yesterday, economic growth is expected to slow down in the coming years due to political uncertainty.

Zimbabwe is headed for watershed elections expected to mark an end to the inclusive government formed in 2009.

“Baseline projections forecast that the economy will grow at 6% in 2013, moderating to 5% in 2014 and 2015 as level of investment remains below potential,” reads the report in part.

“The outlook remains fragile and clouded by possible compression of exports due to the unfolding global economic slowdown, the risk of disorderly unwinding of vulnerabilities in the banking sector, downside risk in the agricultural sector, potential destabilising effects of indigenisation programme on the economy, external vulnerability and uncertainty from the new electoral cycle.”

The World Bank noted Zimbabwe had not yet entered a sustained path to recovery adding that growth in the mining sector was being inhibited by limited exploration.

The government figures show that foreign direct investment, which at peak accounted for an average of 20% of the gross domestic product (GDP), now accounts for 3% of GDP.

“Sustainable growth will require a further expansion of imports leaving room for expanding inflows of capital goods.

“This will depend on the capacity to further expand exports, beyond the rebound driven by higher international commodities prices, mainly in mining and agriculture,” the World Bank report reads.

The Breton Woods institution also advised the government to encourage foreign direct investment and exploration in the mining sector saying the capital-intensive industry had the capacity to boost other key economic sectors. The mining sector currently accounts for more than 50% of the country’s exports.

The World Bank attributed an economic rebound that started in 2009 after a decade-long meltdown to the mining sector that currently accounts for the bulk of export earnings.

“However, given the lack of exploration that is likely to take place with the current fees and uncertainty with respect to ownership, it does not seem likely that there would be a major increase in activity in the long run,” the World Bank noted.

“The two biggest impediments to new investment and exploration are indigenous ownership requirements and the very large application and registration fees for prospecting and exploration.”

Under the country’s equity laws, foreign-owned companies operating in Zimbabwe are required to dispose of 51% shareholding to locals.

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  1. I don’t understand why u believe that Zimbabwe can realize its potential only when our minerals are being exploited by western countries. I think the 51% stake for local people is good because these minerals wont grow, when they are exploited they will never come back again. What would happen when they are exhausted? Do u think these westerners will continue to employ u when the resources are finished. I think on things like resources westerners should get a low stake to the tune of 20% or below. How on earth can few individuals own 90% of resources at the expense of about 14 000 000 Zimbabwe. I think u as journalist should think about tomorrow not just think of your own interests. The big problem in Zimbabwe is corruption and greediness. Zimbabweans no longer trust each other because they know how corrupt they have become as a nation, now our Journalist think that anything that involves our brothers is corrupt and would not succeed. Yes people make mistakes but we should learn to trust each other and be able to use the knowledge that we acquired to good use. There is nothing that westerners CAN DO that we can’t do. Given the OPPORTUNITY we can do better and improve our standards of living for good. Lets not spent our time on negative thing but the positive side that can bring sadza on the table.

    1. “There is nothing that westerners CAN DO that we can’t do”.I agree,if only we are transparent and the corrupt get justice. The western succeed because they have rule of law irrespective of who you are …head of state or povo. If we impliment it, with accountability …..Zimbabwe huchi I will not be living away from Home.

      I recently bought shares from pension in a mining company in South America and I expect a return, so are other investors. If the same country now turns and say they want 51% of my investment or even 20% of my investment without paying for it ….you expect me to continue putting money in that country. Forget it and would consider them as thieves.

      If black people like me want a stake in an investment we should go to the stock market and offer a price to buy. One thing you forget is that resource investment is a very risky if viewed on an individual mine basis. Often investors go for years pouring in money. I once sunk a borehole at my property and never got a litre of water so is mining sometimes.

      You need a lot of capital to identify(locate) and extract the minerals which are also subject price fall, below what was planned for at investment. Sure if we have the capital, to hell with the Western including the Chinese who are getting our minerals for a song.

      Also how do you fund and distribute the shares among all of us…..and I am not talking about this stupid community trust share holding in which no one is accountable.

      1. I agree with u my bro, thanks for that perspective. Accountability and transparent is the way forward to build a multi-billion economy.

  2. The west succeeded because they were exploiting foreign resources without any need for accountability, rule of law or any niceties like that. It is a big lie to say they succeeded because they were transparent and accountable. Talk of the wild wild west, the Belgians in Congo and the British in Hong Kong. There was nothing of the sort when they forced the Chinese to buy opium in exchange for tea or looted gold and diamonds from SA, India, Ghana and most other African places. There was institutionalised corruption in western states that wen to the very top of governance. Trasparency only came later when it was clear the world had woken up to their plunder. One disadvantage of Zimbabwean education is we are very academic and less practical. Explorer came up with a very practical argument until the academic argument from Tsuro. People like Cecil Rhodes did not care about transparency and accountability, they took for free and amassed extreme wealth. All the rich aristocrats cared little about transparency and accountability.

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