Republic of Zimbabwe Minister of Finance Patrick Chinamasa along with Vice-President of the People's Republic of China Import-Export Bank Zhu Hongjie signing a $318 million hydro power contract in Harare., a photo by Pan-African News Wire File Photos on Flickr.
Economic growth achievable
Sunday, 05 January 2014 00:00
Kudakwashe Bwititi
Zimbabwe Sunday Mail
In the wake of projections by Finance and Economic Development Minister Cde Patrick Chinamasa that the economy will by year-end register 6,1 percent growth, some prophets of doom are already being critical,
essentially blowing hot air.
The murmurs emanating from some quarters in the chatterbox are that Cde Chinamasa is daydreaming while others are of the view that these targets will never be achieved.
Mr Tendai Biti, the former finance minister, was recently quoted in a local daily saying the economic growth projections were irresponsible and hopeless.
“This is the most irresponsible budget he has presented. It is just a clueless and hopeless budget,” Mr Biti was quoted as saying.
Singing from the same hymn book, economist Mr John Robertson had this to say: “There is no way we are going to achieve the 6,1 percent growth rate when we are stifling growth in the mining sector by insisting on the 51 percent local ownership on mines.”
MDC-T organising secretary Mr Nelson Chamisa also weighed in with some political undertones saying, “They (Zanu-PF) have no idea on how to run this economy and this is why we are having such a bad budget, which is not what the country requires at this moment.”
Mr Biti, Mr Roberston and Mr Chamisa are all learned individuals. But for all their intelligence, they forgot the simple fact that pessimism has never discovered the secrets of the stars.
In the words of one William Crosbie Hunter, optimism is life and pessimism is slow suicide.
We cannot afford to perform economic suicide so early when we have not even begun to implement the measures that were proposed in the National Budget.
Economic growth is not just a theoretical measurement, it has the potential to uplift the majority’s standards of living as well as alleviate poverty, as a result of a simultaneous increase in employment opportunities and productivity.
Yes, the economic malaise is evident in, amongst other things, the liquidity challenges, the US$6,1 billion external debt that is hanging precariously over our heads, low capacity utilisation in industry, the lack of a vibrant middle class, low disposable incomes and incessant power shortages.
Added to this are the sickening levels of corruption that are contributing to the widening gap between the rich and poor.
But there are so many glimmers of hope for our economic fortunes and these are what we need to focus on.
The positive focus shows there will be increased revenue and transparency from and for our diamonds this year.
The entire mining sector is also set for a boom owing to increased production despite fluctuating prices on the global market.
Tobacco is once again expected to contribute heavily to our export earnings, while tourism is also expected to perform better.
In addition, the financial services sector is projected to witness a renewed sense of confidence following a plethora of measures that were pronounced in the budget.
While it is true that it will be a tough task to achieve the projected economic growth, it is also true that the projections are not insurmountable.
The first step should be to believe that these targets are achievable. Confidence-building nationwide, therefore, is not a choice.
Economist Mr Luxon Zembe said the 6,1 percent economic growth target is well within reach as the country only “needs to do the right things”.
“That target was not out of the ordinary and, indeed, it can be achieved. We have the capacity to achieve it, but only if we do the right things,” he said.
Mr Zembe said the steps to achieving economic growth include policy consistency, increased efforts to attract and preserve foreign investment, appropriate implementation of the indigenisation and economic empowerment programme and restoring the work ethic among Zimbabweans.
It is notable that of all the above issues, progress is being made in addressing each one of them.
In terms of policy consistency, the budget made several pronouncements to ensure the country adheres to what it has set out to achieve.
To this end, Minister Chinamasa proposed to award several incentives for measures that will support the goals of the budget.
One of the incentives is that with effect from January 1 2014, financial institutions will get tax exemption on interest income earned on loans advanced to small-scale miners.
This means financial institutions are now encouraged to provide funding to small-scale miners. In turn, this translates into a meaningful chance to achieve increased gold output to Fidelity Printers and Refiners.
Tax incentives will also be provided for companies that add value to natural resources while “disincentives” will also be available for raw exports, particularly in the mining and agriculture sectors.
On indigenisation, Minister Chinamasa made it clear that no stakes will be awarded for free and the empowerment process is not unfriendly to foreign investors as foreign companies still have the freedom to choose their local partners.
“However, what needs to be clarified in this connection is that the 51 percent stake for Zimbabweans is not available for free where the enterprise does not benefit from a natural resource or raw material derived from Zimbabwe.
“In the same vein, where the enterprise does not benefit from a natural resource or raw material derived from Zimbabwe, the business partners in the investment are free to make their own decisions on how and when, within the gazetted framework, the 51 percent contribution is to be financed or achieved.
“Government does not expect this to happen overnight, but expects it to be a process which should ultimately lead to conformity with the law. It should also be clarified and understood that the investor has a privilege of choosing his/her Zimbabwean partner. Only where this arrangement has failed would Government assist.
“It is on the basis of the above clarification that Government is placing great importance on investment as a major driver of the Zim Asset programme. Both local and foreign direct investment is most welcome and vigorously promoted.”
So there is hope after all.
Pessimism will only kill us.
As a nation, we have prevailed over bigger challenges through national tenacity and unity of purpose.
In his closing remarks in the National Budget presentation, Minister Chinamasa said it is important to remain optimistic.
“There’s now a palpable spirit of optimism gripping our country and this should provide the strength and motivation to deal with the challenges lying ahead and transform the livelihoods of all our people for the better,” he said.
Optimism should remain the catchword. Let us believe that we will achieve greatness.
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