WB urges economic diversification

HARARE - Zimbabwe must diversify its economy to achieve sustainable economic growth in the medium-term, the World Bank (WB) has warned.

The country has pinned its 2013 economic growth hopes on the mining sector.

Nadia Piffaretti, World Bank (WB)’s senior economist, said Zimbabwe must adopt the Malaysian economic development model.

The Malaysian model, considered one of the best performing in the world, is hinged on minerals and manufacturing sector development.

“Trying to imitate the Chinese model which is driven by manufacturing will not work for Zimbabwe. Even with the natural resources in your country, following the example of an economy like Botswana that is driven by diamonds will not be sustainable either,” Piffaretti said while presenting a paper entitled “Leveraging opportunities for sustainable growth: challenges and trade-offs” last week.

Despite the immense potential by the mining sector to lead the revival of Zimbabwe, the country’s economy remains hinged on agriculture, a scenario which Piffaretti said is not sustainable.

Last year, Zimbabwe had to revise its economic growth targets from 9,4 percent to 4,4 percent following a decline in agricultural production due to adverse weather conditions among, other challenges.

“The mining sector is still recovering, and the country was not able to take full advantage of the global boom in mining prices,” she said.

“In the baseline scenario we project a maximum of $5 billion investment by 2018. Most production would expand in gold and coal with new 5 000 jobs being created.”

Speaking at the same occasion, Economic Planning minister Tapiwa Mashakada said the country should continue using the multi-currency system if economic growth is to be sustained.

“Things are looking very positive. I see 2013 as a watershed year, even beyond 2013,” he said.

Mashakada said the political situation had improved, with the country expected to hold peaceful elections later this year.

He warned that any policy shift on the multi-currency regime  — dominated by the United States dollar  — could undermine progress achieved so far in the recovery of the economy.

“It is a good planning element for the private sector,” he said.

The country adopted the multiple currency system early 2009 to replace the Zimbabwean dollar.

The system helped restore price stability, restart financial intermediation, and instil fiscal discipline by precluding the option of budget deficit monetisation.

Mashakada said the formation of the coalition government by long-time rivals President Robert Mugabe and Prime Minister Morgan Tsvangirai had restored political and economic stability, following a decade-long recession.

Last year, Zimbabwe’s trade deficit widened as imports at $7,8 billion outweighed exports at $3,6 billion, according to official statistics. - Business Writers

Post a comment

Readers are kindly requested to refrain from using abusive, vulgar, racist, tribalistic, sexist, discriminatory and hurtful language when posting their comments on the Daily News website.
Those who transgress this civilised etiquette will be barred from contributing to our online discussions.
- Editor

Your email address will not be shared.