The fall of former President Robert Mugabe in 2017 has rekindled hope among Zimbabweans that the once bread basket of Africa could rise again and reclaim its space as an economic powerhouse in Southern Africa.
While citizens have clearly expressed their aspirations, there has not been much attention on how the government can resuscitate the ailing economy and improve the living conditions of citizens who have endured years of economic downturn under the Mugabe rule.
Economic commentators and analysts believe the new administration has a lot of work to do to fix the economy including introducing a stable currency, limiting government expenditure and channeling more resources to productive sectors such as agriculture and tourism, among other measures.
For Victor Bhoroma, a business analyst with the University of Zimbabwe, adopting the South African currency is more beneficial to the country as it will improve the country’s performance.
“The benefits in adopting the Rand far outweigh the perceived strict financial compliance regulations that will be placed on the country by the South African government. Adopting the Rand as the official local currency will improve the country’s export performance as it makes our local industry competitive through bench-marking with the South African standard.
“This has an effect of restricting imports into the country which stand at $5,3 billion (Over 50 percent of imports come from South Africa), as the rand is weaker than the stable US$ on the market,” said Bhoroma in an interview.
He added that key industries that will also benefit include transport, tourism, banking and ICT as local prizes have been very uncompetitive in the region and also run-away inflation, three tier pricing, high interest rates on lending and exchange control indiscipline will also be corrected through this way.
More so, Bharoma said there needs to be a long term solution to the liquidity and financial crisis in the country since inflation is creeping in fast as the central bank continues to print money through the RTGS System to fund imports ($5b yearly) and government civil service expenditure (85% of National Budget).
Speaking during a post budget seminar in Harare on Monday, economist, Ashok Chakravat called for the adoption of the South African rand to counter the biting cash crisis in the country.
“Some countries, if they cannot re-introduce their own currency, they adopt the currency of their main trading partner.
“In our case, our main trading partner is South Africa, so it means we adopt the rand. Adopting the rand does not mean falling under the reserve bank of South Africa,” said Chakravat.
Presenting the 2018 national budget finance minister, Patrick Chinamasa said that the mining sector is expected to grow by 7.5 percent in 2017 on higher output in most minerals, including diamonds gold and coal.
He also said overall mineral export receipts were around $2 billion in the 10 months to October, compared to $1.6 billion during the same period in 2016 constituting 25.2 percent of the country’s total exports.
Commenting on the 2018 national budget in a local newspaper, Industrialist, Callisto Jokonya said the 2018 budget set the tone for economic recovery as the liquidity challenges and corruption prevailing in the country are to be tackled head-on, as well as ensuring efficient civil servant with customer focused attitude.
“I am very positive about the economy. We are coming from zero. We have never had the budget for the past years. It was prepared, but no follow up was being done on the pronouncements. There is still a deficit, but he tried to narrow it down and ensure the President will support how to lower the deficit because there is a link between the President’s vision and that of the minister,” he said.
Economic analyst, Christopher Mugaga cited agriculture and tourism as the main anchors of economic growth in Zimbabwe saying it is important for government to full resource those two sectors.
“Agriculture remains an anchor industry for the Zimbabwean economy to grow,” said Mugaga in a telephone interview.
However Mugaga called on government to closely monitor costs incurred in resourcing the command agriculture to realize return on investment.
While the government has presumably hit the ground running, it remains to be seen what Mnangagwa’s first 100 days in office will achieve as it is likely to give an indication of his drive economic agenda.