Business: 2018 out­look promis­ing:

The Manica Post - - Front Page - Kudzanai Gerede Business Cor­re­spon­dent

ON THE back­drop of a tu­mul­tuous 2017, ex­perts are con­fi­dent the year 2018 will bear a much pos­i­tive out­come for the econ­omy par­tic­u­larly with re­gards to in­creased in­vest­ment flows into the coun­try ex­pected to be the key de­ter­mi­nant for eco­nomic growth.

In­creased For­eign Di­rect In­vest­ment has been elu­sive partly as a re­sult of the 51-49 per­cent clause in the Indi­geni­sa­tion and Em­pow­er­ment Law with other fac­tors such as poor com­pet­i­tive­ness, neg­a­tive coun­try per­cep­tion and ram­pant cor­rup­tion damp­en­ing in­vestors’ con­fi­dence in the mar­ket.

The global out­look is, how­ever, en­cour­ag­ing, with the World Bank Out­look Oc­to­ber re­port hav­ing al­ready pro­jected a 3.4 per­cent growth in Sub-Sa­ha­ran Africa for 2018 as a re­sult of sta­bil­i­sa­tion of fis­cal deficits, nar­row­ing of cur­rent ac­count deficits and a slight re­bound in com­mod­ity prices.

This with­stands mount­ing vul­ner­a­bil­i­ties both in the re­gion and also at a lo­cal level that in­cludes the ris­ing public debt, fi­nan­cial sec­tor strains and weak pro­duc­tion.

How­ever, fol­low­ing re­cent po­lit­i­cal de­vel­op­ments which led to a change in the coun­try’s po­lit­i­cal lead­er­ship, which has given birth to a new dis­pen­sa­tion, ma­jor changes have al­ready been made that are likely to im­pact the econ­omy in pos­i­tive light.

The amend­ment to the Indi­geni­sa­tion and Em­pow­er­ment Act that will see the scrap­ping off of the 51-49 per­cent thresh­old is ex­pected to be fi­nalised this year and the mo­tion has al­ready re­ceived ap­plause from var­i­ous quar­ters as cru­cial to at­tract­ing for­eign cap­i­tal.

Fur­ther­more, this comes at a time when the coun­try is ex­pected to fully op­er­a­tionalise the Spe­cial Eco­nomic Zones fol­low­ing the set­ting up of the board to be chaired by for­mer Re­serve Bank of Zimbabwe gov­er­nor Dr Gideon Gono late last year.

This is a ma­jor boost for the ail­ing man­u­fac­tur­ing sec­tor.

Eco­nomic an­a­lysts say this will fur­ther be boosted by the gains al­ready made from the Ease of Do­ing Business re­forms which have been un­der­way since 2015.

“Be­fore we talk of any changes in leg­is­la­ture with re­gards to the indi­geni­sa­tion law, let us first agree that in­vestors are con­cerned with the business op­er­at­ing en­vi­ron­ment for them to make a de­ci­sion that they want to in­vest here, so the Ease of Do­ing Business re­forms are thus so im­por­tant be­cause they de­ter­mine the day-to-day run­ning of the business, and that is key,” com­pet­i­tive­ness ex­pert Pepukai Chivoore told Post Business this week.

“So we are op­ti­mistic that what the Of­fice of the Pres­i­dent and Cab­i­net (OPC) has been do­ing will boost business in 2018 as they will be fi­nal­is­ing set tar­gets,” he added.

In his 2018 Na­tional Bud­get state­ment, Fi­nance and Eco­nomic Plan­ning Min­is­ter Pa­trick Chi­na­masa pro­jected a 4,5 per­cent GDP growth.

Ow­ing to com­mod­ity prices im­prove­ment, the coun­try projects min­eral re­ceipts of US$2,5 bil­lion in 2018 up from US$2,3 bil­l­lion. This growth in the sec­tor will be achieved as a re­sult of in­ter­ven­tions that in­clude the con­sol­i­da­tion of the di­a­mond sec­tor, in­creas­ing coal out­put fol­low­ing re­cap­i­tal­i­sa­tion of Hwange Col­liery Com­pany and fund­ing of small-scale gold min­ers by the Cen­tral Bank which saw in­creased out­put from the ar­ti­sanal min­ers in the past two years.

How­ever, an­a­lysts ex­pect con­tin­u­ing head­winds that char­ac­terised 2017 to pose a stern test for the new Gov­ern­ment in the short to medium term.

The liq­uid­ity cri­sis and cash short­ages will need to be im­proved for the smooth flow of business in the coun­try. This will, how­ever, hinge upon the coun­try’s readi- ness to im­prove its ex­port re­ceipts to gen­er­ate ad­e­quate for­eign ex­change to sta­bilise the fi­nan­cial sec­tor.

Re­sul­tantly, this has given ex­erted in­fla­tion­ary pres­sures on the econ­omy de­spite calls by Pres­i­dent Mnan­gagwa for sta­bil­i­sa­tion of the pric­ing sys­tem dur­ing the just ended fes­tive pe­riod.

How­ever, the fi­nance min­is­ter has al­ready pegged in­fla­tion at an av­er­age of 3 per­cent in 2018, and an­a­lysts warn of an up­hill task ahead as far as re­strict­ing price hikes is con­cerned given ram­pant buy­ing and sell­ing of bond notes on the par­al­lel mar­ket.

“Putting an end to the thriv­ing par­al­lel money mar­ket should be enough to sta­bilise the fi­nan­cial sec­tor. High cash pre­mi­ums are press­ing in­fla­tion­ary pres­sures and if left unat­tended will prompt a mas­sive rise in in­fla­tion go­ing for­ward in 2018,” said eco­nomic an­a­lyst Percy Gwanyanya.

MIn­is­ter Chi­na­masa

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