Zim economy stagnates: World Bank

HARARE - Zimbabwe's economy is expected to grow by one percent this year, on the back of a sustained liquidity crunch and under performance in all economic sectors, the World Bank has said.

In its Global Economic Prospects June 2015 Sub-Saharan Africa growth trend released this week, the Bretton Woods institution forecast Zimbabwe’s gross domestic product to grow by 2,5 percent next year before leaping to 3,5 percent in 2017.

The latest predictions by the World Bank put a dent on the ruling Zanu PF’s five-year economic blueprint, ZimAsset, which was supposed to stir the country forward at an average growth of 7,2 percent per annum.

Economic experts say President Robert Mugabe and his government’s policies have failed to grow the economy despite promising to create more than 2,2 million jobs in the run up to the 2013 elections.

The country’s economy is a disaster after three decades of dictatorial rule by Mugabeand his Zanu PF party.

Zimbabwe currently faces famine this year, with a shortfall of more than a million metric tonnes of maize.

Economist John Robertson yesterday told businessdaily that the World Bank projections were “very conservative”.

“I actually suspect the growth will slow down even further than the one percent they have pointed to because of all the deficiencies the economy is experiencing.

“The country should just brace for the worst as growth may even recede lower than one percent,” he said.

Robertson warned the Zanu PF-led government to work hard around issues of policy clarity to increase investment inflows into the country and boost growth.

“I have always said government is not doing enough. Issues around the rule of law and policy clarity are still outstanding and at this rate with the amount of competition investment has in the region, investors will not come,” he said.

This comes as concerns have further been raised regarding the country’s indigenisation laws, which compel foreign-owned firms in key sectors of the economy such as mining, to cede a majority stake, at least 51 percent, to indigenous Zimbabweans.

The Indigenisation and Economic Empowerment Bill defines an indigenous Zimbabwean as “any person who before April 18, 1980 was disadvantaged by unfair discrimination on the grounds of his or her race, and any descendant of such person.”

In addition, earlier this year, Zimbabwe announced plans to merge all diamond miners into a single company in which the State would own 50 percent of the shares as part of its economic empowerment programme.

This coincided with mining giant Rio Tinto agreeing to sell its 78 percent stake in the Murowa Diamonds Mine and its 50 percent holding in the Sengwa Colliery Mine to its former local unit, RioZim.

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