The Economy
The President pointed out that the country’s economy continues to grow at a slow pace, owing to depressed industrial activity, tight liquidity conditions, low international commodity prices, shortages of affordable lines of credit, illegal sanctions and underperformance in both the agriculture and manufacturing sectors. This negative picture has led to a downward revision of the country’s GDP growth rates 9.4% to 5.6%. In spite of this setback, the growth rates were noted to be still within the Sub-Saharan average growth rates of 5%. The urgent need to redouble efforts in the implementation of initiatives to attract investment and stimulate economic growth, as contained in the Medium Term Plan, was highlighted. As part of this thrust the ZIA Bill which seeks to enhance the country’s competitiveness as an investment destination will be therefore be discussed in the fifth session.
Agriculture
Agriculture, according to the President, remains the country’s leading economic sector, contributing between 15% and 18% to GDP, 40% of national export earnings, 60% of raw materials to industries, while also providing the largest formal and informal employment. It was pointed out that the sector should accordingly be accorded priority treatment in terms of planning and provision of resources.
The sector’s performance was noted to have frequently been undermined by adverse climatic conditions, unavailability of affordable inputs, product market distortion, unaffordable finances and high transaction costs. These challenges have to be addressed in a decisive manner in order to fully unlock the sector’s potential. With regards to the issue of marketing, the operationalization of the Commodity Exchange of Zimbabwe will commence soon to engender efficiency in the marketing of agricultural projects, amongst other commodities, thereby ensuring fair return for farmers.
Drought
The drought experienced in several parts of the country in the 2011-12 agricultural season has brought about acute food shortages in the affected areas. The President mentioned that Government remains committed to ensuring that citizens don’t die of hunger, and that food is distributed to all needy persons. A decision has already been taken to distribute maize to needy households under the Extended Grain Loan and the Vulnerable Social Groups Scheme.
The relevant Government ministries and departments were urged to execute this task with a sense of urgency. The President highlighted that measures will continue to be taken to save livestock in drought prone areas, through the provision of supplementary feedstock, borehole drilling and baling of grass. Considerations on the transportation of livestock to areas with surplus pastures were also being looked at. Communities were discouraged from destroying the available limited pastures through veld fires.
Mining
The mining sector’s status as the key driver of the economy’s growth and development was noted to be continuing to improve. The long awaited Mines and Minerals Amendment bill, which seek to facilitate increased mineral production, providing more competitive mining legislative framework, facilitate continuous exploration and local beneficiation of minerals will be tabled.
The Zimbabwe Diamond Policy which will guide the sustainable development of the local diamonds industry is now in place. The policy will entail amendment of the Precious Stones Trade Act and promulgation of a Diamond Act. The President pointed out that continued growth of the mining sector hinges on implementation of intensive exploration programmes.
Accordingly, government through the Zimbabwe Mining Development Corporation is resuscitating the Mining Promotion Corporation, a company which will spearhead mineral exploration activities. Already equipment worth USD4 million has been purchased for eventual use by the company upon operationalization.
Efforts to clear the current backlog on exclusive prospection orders (EPOs) were said to have been stepped up, which will soon see the resumption in the issuance of new ones. With regards to illegal panners, it was pointed out that steps are underway to decriminalise panning activities and allow then to operate in a legal and properly managed manner.
Energy
The President pointed out that the realisation on the country’s economic recovery and growth hinges on the availability of adequate energy supply. The country has been relying on limited power supply for quite some time now. Government was said to be working on a number of strategies to improve power supply.
In the short term, measures that are currently being implemented include prioritising the maintenance of power stations in order to optimize their performance and rolling out a programme involving free distribution of energy saving fluorescent lamps in homes and institutions to save 180MW during evening peak periods.
The medium resolution on power supply challenges is anchored on the expansion of the country’s power generation capacity. Evaluation of expansion of power generation at Kariba Power and Hwange Power is currently underway. When implemented, the two projects will yield additional 900MW. Long term renewable energy such as the Gokwe Thermal Power Plant, Batoka Hydropower Plant, Lupane Coal Bed Methane gas project are already at different stages of implementation.
With regards to the petroleum sector, it was pointed out that the blending of petrol with ethanol was reintroduced in October 2011, starting with 10% ethanol blending. The benefits of blending will be in terms of reduction in cost of fuel, which is a major inflation driver and employment creation in petroleum value chains.
Transport, communication and infrastructural development
The Civil Aviation Act will be amended to provide for the separation of the Civil Aviation Authority of Zimbabwe into two entities; namely, Airports Management Administration and the Civil Aviation Regulatory Authority. This will enable government to better discharge its international obligations and responsibilities with respect to aviation safety, oversight and security function.
The search for a strategic partner for Air Zimbabwe was said to be still on. On the roads subsector, a strategic partner has been engaged for the dualisation, rehabilitation and upgrading of the Plumtree-Bulawayo-Mutare national highway. Discussions with a strategic partner for the dualisation, rehabilitation and upgrading of the Masvingo-Harare-Chirundu national highway, through a public-private arrangement, were said to be also underway.
SMEs
The President emphasised that micro, small and medium enterprises have the potential to stimulate rural industrial development, as they provide income generating opportunities for people at the grassroots level. To that end, Government continue to afford priority to the building of the sector’s capacity through skills development, technology transfer, provision of infrastructure and marketing information.
In partnership with COMESA, Government is currently carrying out a project known as Passenger Cargo Manifest system, which seeks to expedite clearance of passengers’ goods as well as capturing cross border trade information between Zimbabwe and Zambia. This year alone Government was said to have distributed 478 business start-up kits to beneficiaries in both rural and urban areas.
Indigenisation
It was highlighted by the President that significant progress has already been achieved in the implementation of the Indigenisation and Economic Empowerment Policy, especially in the mining sector. Most of the big mining houses have complied with the requirements of the Policy, with five community share ownership programmes having been launched around the country. A number of companies in the various sectors of the economy have appointed trustees for employee share ownership schemes.
Parastatals reform programme
The President indicated that the implementation of the parastatals reform programme continues to call for a greater sense of urgency. To date modest progress has been made with respect to restructuring of Agribank. A State Enterprises and Parastatals Management Bill, which is intended to codify the corporate governance framework, shall be discussed in the fifth session.
Labour
The Tripartite Negotiating Forum (TNF), which brings together government, business and labour, in negotiations over key socioeconomic matters, was established in accordance with the International Labour Organisation (ILO) Convention 44. Although the TNF has pursued dialogue since its formation, its successes have however been affected by the lack of a legal framework. To circumvent this shortcoming, a TNF Bill shall be tabled for discussion.
Post published in: Business