Zimbabwe’s government revise economic growth target downwards to 4.7% from 7.8% due to poor performance in the agriculture sector

Harare, 16 November 2012– Zimbabwe’s coalition government has revised downwards its economic growth target for 2012 to 4.7 percent from an initial target of 7.8 percent largely due to the poor performance of the agriculture sector.

Tsvangirai and Mugabe – Zimbabwe leaders

This was disclosed during the launch of the country’s first annual Medium Term Planning (MTP) implementation progress report last Monday (12.11.12). The progress report lauded as the “first-ever-time” government has evaluated its performance reviewed economic progress during the first year of the MTP whose full course ends in 2015.

The MTP also touted as the country’s economic blue-print was launched in July 2011, is a five year development plan whose thrust is to ensure that the country achieves sustainable growth and development. The blue-print is championed by the Ministry of Economic Planning and Investment Promotion headed by opposition Movement for Democratic Change’s Tapiwa Mashakada.

Mashakada said field visits undertaken by his ministry to check progress on the implementation of the MTP programmes showed that most of the projects were on course but were adversely restricted by inadequate funding.

The report also blamed delays in the setting up of the institutional and legal framework for the public private partnership for denying the MTP of a key source of funding.

‘’Finalising outstanding issues on the public private partnership is critical especially given the funding challenges that the MTP is facing. The MTP identified private sector led economic recovery as a key strategic priority. However, efforts to grow and promote private sector development have been adversely affected by the uncompetitive operating environment, liquidity constraints in the banking sector and lack of lines of credit,” the report said.

The report added that further efforts to mobilize foreign direct investment which is critical to close the funding gap in the MTP have been undermined by policy inconsistencies in government and perceived political risk.

“It is important for government to avoid policy contradictions and inconsistencies and reduce the cost of doing business in the country in order to attract both domestic and foreign direct investment which is critical to fund the MTP,” the report advised.

Zimbabwe reportedly requires US$2 billion per year over the 5 year MTP implementation period, which translates to 66 percent of the national budget in a country where government recurrent expenditure is estimated at 85 percent of the national budget.

As a result of the failure to mobilize alternative funds to finance MTP projects, the national budget remains the key instrument for funding the MTP despite challenges of an increasingly constricted fiscal space.

The MTP has set an average economic growth target of 7, 1 percent over the period 2011-2015. In 2009, the economy grew by 5, 4 percent and in 2010, it chalked up a 9, 6 percent growth rate. This positive growth was followed through in 2011 by a growth target of 9, 3 percent. This economic growth momentum was largely underpinned by recoveries in mining and agriculture sectors and was expected to continue on the positive growth projectile that began in 2009.

Despite mixed feelings over the performance of the economy in the first year of MTP, economic pundits were generally agreed that the MTP review process has helped improve coordination and policy planning within government, which is essential for achieving continued macro-economic recovery and sustainable development.

World Bank resident chief economist Nadia Piffareti said in spite of challenges, Zimbabwe was one of the fastest growing economies in the world in 2011.

“After this positive trajectory, real economic growth must kick in and I think for this country, the mining sector is the only sector capable of autonomous growth and driving this economic growth. Malaysia could be the best model of growth for Zimbabwe as they use mineral resources to power up economic growth,” she said.

Coalition government Premier Minister Morgan Tsvangirayi described the MTP as a government programme which must religiously be followed until 2015 irrespective of any political changes that may take place.

He commended the ministry of Economic Planning and Investment Promotion for coming up with a programme that evaluated the performance of government.

“This is the first time; we in government have taken this route of reviewing ourselves. We have done this so that in the second year, we are wiser and able to achieve better results,” said Mashakada.

Deputy Prime Minister Arthur Mutambara described the MTP review as a major milestone in the history of the country.

“Very often we come and launch programmes but we do nothing about implementing what we have launched. This is a very interesting meeting, if we could have more of these meetings to review our progress in government. Monitoring and evaluation are very important for government policy.”

Tsvangirayi however challenged the nation to desist from using lack of funding/ resources as an excuse for failure and mediocrity saying often times, government programmes did not require financial resources but were instead constrained by red-tape.

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