A LEADING economic expert has warned that an expected volatility of commodity prices on the international market could hurt Zimbabwe’s economy, further widening the country’s trade deficit.
Report by Tarisai Mandizha
Speaking at the Alternative Mining Indaba in Harare on Tuesday, Labour and Economic Development Research Institute of Zimbabwe director Godfrey Kanyenze said commodity prices have been easing in the first half of 2013, due to both increased supply and weaker demand and are expected to continue easing over the short to medium term.
“The economy is more resource-based as the rebound since 2009 has been characterised by stronger growth in mining than manufactured tradables, and the export recovery is driven by primary commodities,” Kanyenze said.
“As a result of the structural regression, the country risks missing out on the opportunity to rebuild a diversified and sustainable economy as it is more exposed to commodity-cycles.”
Official figures show that since 2009 exports have been trending upwards although imports continue to treble export receipts.
Exports rose to $4,3 billion in 2012 from $1,613 billion.
During the period under review, mining has overtaken agriculture as the mainstay of the economy, accounting for over 50% of export receipts.
- Chamisa under fire over US$120K donation
- Mavhunga puts DeMbare into Chibuku quarterfinals
- Pension funds bet on Cabora Bassa oilfields
- Councils defy govt fire tender directive
Keep Reading
However, Kanyenze said the potential of the mining sector could be maximised through building resource linkages with the rest of the economy comprising revenue linkages, backward linkages supply chains, forward linkages, value addition or beneficiation, knowledge and spatial linkages to create new industries associated with mining.
“Zimbabwe should take advantage of the high level of prices for natural resources to unlock resource-based structural transformation,” Kanyenze said. He said resource-based industrialisation and job creation was dependent on establishing the crucial mineral economic linkages.
Kanyenze added that the finalisation and enactment of the Diamond Revenue Bill would also create a proper legal framework to deal with the audit trail of all diamond revenue, its sharing and distribution as well as the role of the Zimbabwe Revenue Authority (ZIMRA) at both production and marketing levels.
Outgoing Finance minister Tendai Biti in July revised downwards the economic growth rate for the mining sector to 5,3% from the initially projected 17,1% due to price fluctuations on the commodities market.
“Developments during the first half of the year, however, indicate that such constraints as falling international mineral prices against rising mineral production costs and perennial challenges related to lack of long-term financing have had a profound effect on gold and diamond mining houses,” said Biti.
