eBusiness Weekly
Targets widespread economic reforms
Treasury chief says green shoots emerge
Golden Sibanda
Finance and Economic Development Minister Professor Mthuli Ncube says Zimbabwean assets are “clearly the biggest buy in Africa” right now after President Mnangagwa’s administration opened up the economy to foreign investment and instituted measures to stabilise, reform and place it on a sustainable growth trajectory.This comes hot on the heels of nearly two decades of instability and intermittent growth, which also came on the back of an estimated 50 percent decline in the size of the economy (GDP) over almost 10 years, precipitated by a combination of poor policies and the battering from western sanctions after Harare redistributed to blacks land held by white former commercial farmers.
After almost a decade of down spiral, Zimbabwe’s economy appeared to recover on dollarisation in 2009, but soon headed back south after a disputed polls in 2013, with the stock market losing over half a billion a day after poll results.
But President Mnangagwa has set out on widespread reforms, global engagement and re-engagement and zero tolerance on corruption to breathe fresh life into the wobbly economy since taking over the reins from former leader Robert Mugabe who reigned for 37 years until his resignation in November last year.
Speaking to CNN News’ Richard Quest’s this week on his Quest Means Business show in New York where he attended a United Nations High Level Meeting on Middle-Income Countries, Minister Ncube said Government was determined to revive and grow the economy as well as open it up for investment.
Minister Ncube’s maiden national budget forecast the economy to grow by 3,1 percent next year and gives direction on Government plans to rebalance, refocus stabilise and sustainably grow the economy including through fiscal consolidation, revenue growth and debt resolution.
Fiscal measures
On fiscal consolidation and revenue growth the minister said: “One is obviously budget cuts in terms of wage bill rationalisation and on that front the President of the country . . . is leading from the front; he cut his salary by 5 percent, we all cut our salaries by 5 percent as ministers to show leadership in terms of cost containment,” he said.
In his 2019 National Budget, Minister Ncube said he was targeting to cut the national budget deficit to about 5 percent of the recently re-based $24 billion gross domestic product (GDP) value, with the country recording a $2,52 billion deficit the prior year.
“We have also expanded the revenue base by following on the informal sector, which has expanded by the way. The economy is 40 percent bigger than we thought. So, in order to expand coverage, we introduced a 2 percent (intermediated) financial transactions tax.
“So, those two together-cost containment and revenue expansion have worked for us very well in terms of fiscal discipline and fiscal consolidation,” the finance and economic development minister said.
Following the measures the Government has instituted, Minister Ncube reckoned, for the first time in long time Treasury managed to balance the national budget in October this year, posting a budget surplus, which he said signified that Government was making progress.
The minister said investors should have confidence in the new Government, as it was walking the talking on its promises, was prepared to uphold rule of law; especially as it relates to property rights. He also said President Mnangagwa’s administration was working hard to enhance the ease of doing business and promote investment through establishment of a one stop shop investment centre.
The Government, he said, had shifted its focus from politics to efforts aimed at reviving the economy, adding President Mnangagwa’s administration was determined to put the economy on the right track to prosperity and for investors who chose Zimbabwe to profit.
Zim Africa’s biggest buy
“Let me say this; Zimbabwe is open for business; Zimbabwe is easily the biggest buy in Africa right now on any asset that you can think of,” he said.
Zimbabwe, home to over 60 mineral occurrences including gold, diamond, platinum, chrome, nickel and lithium plans the privatisation of some State-owned entities starting with Tel-One,Net-One,Telecel, Zimpost and POSB. The five entities, with more to come, will be partially privatised through joint ventures and or listings.
“You talk about the rule of law; literally this is about property rights at the end of the day. Property rights are secure in Zimbabwe; we have a judiciary that works; we have contract enforceability conditions that work; we have rule of law that works and we have a list of other institutional reforms that we have put in place and that includes improving the ease of doing business and putting in place a one stop shop (investment centre) to make it easy for investors come in.
“Clearly, Zimbabwe is the biggest buy in Africa right now,” Minister Ncube said.
Investors must believe in Zim
Asked why investors should believe and have trust in the new dispensation Minister Ncube said “because we are walking the talk, for the first time we are walking the talk, we are doing everything we have said we will do; we are measuring the results; we are very results oriented.
“If you look at our Transitional Stabilisation Programme (TSP), it is a results based policy enactment programme,” the finance minister said.
Minister Ncube said the main focus, espoused in Government’s short-term economic interventions strategy document, the Transitional Stabilisation Programme (TSP), which lays the foundation of Zimbabwe’s Vision 2030 of attaining middle income status, was to rein in the twin evils of fiscal and current account deficits.
Debt resolution
The finance minister also said that Government was working on measures to address the country’s huge external debt arrears, which the minister said would be dealt with decisively within the next 12 months.
“We are re-engaging and that is a two step procedure; first of all we have to get our economic reform programme, which is enshrined in a document called the transitional stabilisation programme, accepted globally; we have done that, we have sold it nationally (too).
“And then we move to the (second) phase, which is to clear the debt arrears to the African Development Bank and World Bank, which is what you call the preferred creditor (IFIs). We are determined that in the next 12 months, that will be done and then we move on the third phases, which is Paris Club negations with bilateral creditors.”
