Zim economy in 2024, beyond
I wish fellow Zimbabweans a happy and prosperous new year, I find it necessary to give a prognosis of the economy in 2024 and beyond.
THIS is especially important considering existential threats from geopolitical factors and the predicted El Niño-induced drought, which are expected to take a toll not only on Zimbabwe, but also the region, threatening the economic progress we have made so far.
Reflecting on the journey we have travelled since we embarked on reforms in October 2018 — under the auspices of Vision 2030, which is being championed by the leadership of President Mnangagwa — it appears we would have done much better as an economy had it not been for exogenous factors, which we have little or no control over.
In a space of five years, we have experienced seven cyclones, including drought in some cases, with Covid-19 and the Russia-Ukraine war taking a toll on the economy in the last three years.
The damage to infrastructure, lives and the economy caused by Cyclone Idai in 2019 cannot be overemphasised.
These external factors happen at a time when the economy is struggling to deal with structural issues, which, with hindsight, policymakers and even the World Bank and the International Monetary Fund (IMF) seem to have underestimated.
Chief among these is the confidence crisis, whose origins can be traced to the hyper-inflationary era in 2008 to subsequent currency reforms that decimated the wealth and savings of both individuals and corporates.
Imagine how hard it is to convince a pensioner who lost their lifetime savings due to hyperinflation to believe in the Zimbabwe dollar again.
The same can be said about those who lost value due to both currency reforms and inflation. It is generally believed that financial crises tend to be more severe and last for a longer time than any other crisis.
For example, about a decade-and-a-half later, the global economy is still struggling to fully recover from 2008-2009 global financial crisis.
Similarly, owing to the hyperinflation experience of 1923, the propensity to hold cash in Germany is still high.
All these cases demonstrate the enormity of the task that lies ahead to remake our economy.
Clearly, it will take time to permanently cure the crisis of confidence.
However, well-communicated policies and a demonstrable will to transform the economy, especially by policymakers and politicians, could make it possible for Zimbabweans to hope and believe again.
Although the economy has grown by 12,3 percent on aggregate since 2018, notwithstand
AROBUST monitoring and evaluation system is vital for tracking the implementation of Vision 2030 and identifying areas that require adjustment or improvement. Regular assessment of progress, identifying bottlenecks and learning from best practices can enhance the efficiency and effectiveness of our initiatives.
This process should involve gathering and analysing data, conducting impact assessments and incorporating feedback from stakeholders.
To strengthen monitoring and evaluation, it is essential to invest in data collection and analysis capabilities.
This may involve training personnel, improving data management systems and establishing mechanisms for data sharing and collaboration.
Additionally, conducting regular impact assessments and evaluations will provide valuable insights into the effectiveness of our interventions and inform future decision-making.
Projected results
Developing realistic and measurable targets is crucial for tracking progress and holding stakeholders accountable.
By setting specific benchmarks and regularly monitoring key performance indicators, we can ensure that our efforts are aligned with the desired outcomes of Vision 2030.
Regular reporting and transparency in sharing results will enhance trust and encourage active participation from all stakeholders.
To establish these projected results, it is important to gather data and conduct comprehensive baseline assessments to understand the current state of affairs in each sector.
FLASHBACK . . . President Mnangagwa tours the billion Dinson lron and Steel Company plant, which is expected to be the biggest in Africa
ing the adverse impact of exogenous factors, more work is still needed to sustainably stabilise the economy.
Clearly, policymakers need to do more for Zimbabwe to trust and believe again, especially in our currency.
What makes that task even onerous this year are softening commodity prices on the global market, as well as prediction of an El Niño-induced drought.
After investing a lot of effort to restore stability in the second half of 2023, the re-emergence of instability in the last quarter of the year is quite concerning. While every last quarter of the year is traditionally our weakest in terms of stability (of course, due to demand and supply factors), the situation was exacerbated by softening global commodity prices, which affected our foreign currency inflows.
Platinum export receipts, which used to generate US$120 million-US$130 million per month, have fallen to US$70 million-US$80 million.
The World Bank reports that lithium prices declined from US$75 825 per tonne in February to US$23 870 per tonne in October 2023, while nickel prices softened from US$29 346 per tonne in January 2023 to US$18 100 per tonne in October 2023.
The standardisation of export surrender to 25 percent also affected inflows from artisanal and small-scale gold miners at a time gold prices have remained strong.
Unsurprisingly, we experienced the depreciation of our currency in the last quarter of the year. This dispels the commonly held belief that currency depreciation is always a reflection of recklessness with the printing press.
A volatile exchange rate always pushes up demand for US dollars as the market seeks to exit the Zimdollar at every opportunity.
This largely explains increased dollarisation, typified by reduction of the Zimdollar as a share of money supply to less than 20 percent. Policymakers need a deeper understanding of these dynamics going forward.
Mining and electricity generation
The prospects of the mining sector remain key to performance of the economy and stability in 2024 and beyond, as it contributes 85 percent of export revenue and less than 20 percent to the fiscus. The forecast of depressed commodity prices in the next two years means the possible drop in revenues will be counteracted by increased production.
Thankfully, there have been increased investments in the sector in the last five years.
More than US$1,5 billion was invested in mining, especially in platinum and lithium, in 2023 alone.
However, performance in the sector will depend on the electricity situation.
Currently, electricity supply and pricing
This will enable us to set realistic targets and develop indicators that accurately measure progress.
Regular monitoring and evaluation will allow for timely identification of challenges and the implementation of corrective measures.
Sound administrative systems
With the introduction of aligning State institutions, it will be easy to ascertain the level of performance of key entities that feed into planning, coordination and implementation matrix.
The Government needs to put in place sound administrative systems at all levels.
Codes of implementation of work must be introduced to align everyone towards the common goal.
It is important to build sound systems that coordinate development automatically, giving each section or sector signals of implementation.
Clear planning and implementation framework
A national planning framework provides a clear developmental path and direction for the Government.
The framework should explain the clear development plan by laying the components of the initiative and the order of the steps needed to achieve the desired results.
A clear framework must organise the information, or, rather, the flow of information.
This facilitates ease and rapidity of communication.
A good framework can also introduce a common language, and those who share it can understand each other and change the situation more rapidly.
remain key risks to performance.
But as 600 megawatts (MW) from Hwange Units 7 and 8 begin to be consistently fed to the grid in the first quarter of 2024, total generation is expected to increase to around 1 150MW, as Kariba Power Station continues to generate around 350MW, while Hwange Units 1 to 6 generate around 200MW.
Though power generation is still way below demand, initiatives by most mining companies to generate electricity -— mainly solar — for their own consumption are comforting.
However, these projects are expected to generate power after 2024.
Similarly, the planned refurbishment of Units 1 to 6 is unlikely to contribute to electricity generation this year.
Deserving special mention is the expected completion of the US$1,5 billion Dinson lron and Steel Company plant, which is expected to be the biggest in Africa.
It will be a game changer for Zimbabwe. This energy-intensive project is commendably going to produce electricity for its own consumption.
Also, its potential to employ thousands of workers and reduce the steel import bill, as well as its contribution to the fiscus, are seen as reviving hopes for a better Zimbabwe.
Given the challenges currently facing the mining sector, any electricity tariff increase, though necessary, may severely affect the targeted growth of 7,6 percent for the sector.
The agriculture sector, whose progress has seen the country achieving food self-sufficiency, is being threatened by the projected El Niño-induced drought.
The weather phenomenon is likely to affect the whole of Southern Africa.
Treasury expects the agriculture sector to contract by 4,9 percent as a result.
A drought would occasion food imports at a time forex inflows are limited.
Going forward, the investment we have made in irrigation infrastructure, including drilling boreholes for the targeted 35 000 villages as well as massive investment on dams, is seen as mitigating against the effects of drought.
However, to guarantee national food security, there is need to expeditiously reach the targeted 350 000ha under irrigation, which would wean the country from rain-fed agriculture.
On the other hand, focus should be towards transforming the Pfumvudza/ Intwasa programme to become commercially viable so as to sustainably guarantee food security at household level.
But there are bright prospects in the buoyant tourism sector, which has been recovering at an encouraging pace. There is also scope to harness revenues from Diaspora remittances.
Infrastructure projects
There must be a clear framework that gives guidance to stages of development.
This framework will give guidance to all stakeholders who will be part of this project.
Monitoring and evaluation systems will build trust amongst stakeholders to have an understanding of the structured development plan.
Results-oriented teams
We need to identify structured provincial teams who can coordinate result-based monitoring systems and use a complementary matrix that feeds into the Vision 2030 mix.
A well-structured development plan must involve a results-oriented team, which is primed for immediate results and action.
It is very important and critical to adopt results-oriented teams throughout all the 10 provinces.
The teams must aim for good results. Contracts must be signed with performance benchmarks.
There must be a systematic approach on results and a broader understanding of key objectives of the plan.
The structure that spearheads the development plan must be competent and diligent.
The structure must put in place a formidable alliance with Government structures and State entities towards the vision and plan.
What the teams need on the ground is enough allocation of resources, proper structure, strategic alliance and enough information to carry out a proper task.
A structured development plan guides on targets towards the main objective.
The major team players spearheading the vision and project must have targets around the task.
It is encouraging that funding models for infrastructure projects are being re-evaluated.
As already indicated in the 2024 National Budget, priority is being given to complete projects underway.
Funding infrastructure projects from shortterm sources will continue to pose risk to stability in 2024 and beyond.
Treasury has introduced a slew of taxes and hiked some to meet the needs of the economy at a time when revenue is expected to be severely constrained.
But it remains to be seen how Treasury will deal with proposed expenditures after it amended some tax proposals following an outcry from the market.
The wealth tax, for example, has been maintained at 1 percent but it now excludes the primary residence, with the minimum threshold now US$250 000, excluding liabilities.
It is only applicable to property owners below the age of 70 years.
It has also since been capped at US$50 000 per year. Ordinary and emergency passport fees, which were initially increased to US$200 and US$300 from US$120 and US$220, respectively, have now been reviewed to US$150 and US$250 in that order, with an additional fee of US$20 to all categories. This may mean a loss of potential revenue of US$12 million-US$15 million, assuming the number of passports issued per year remain unchanged at between 400 000 and 500 000 copies.
Even the proposed 150-200 percent increase in toll fees has been revised down to 100 percent for premium roads and an average of 50 percent for other roads.
For example, toll fees for light motor vehicles, which were initially expected to increase from US$2 to US$5 and US$4 on premium and other roads, respectively, have now been increased to US$4 and US$3.
Interesting is the sugar content tax of US$0,02/gramme, which is common in the region and the world but new to Zimbabwe.
This, together with increase in Strategic Reserve Levy by US$0,03 and US$0,05 for diesel and petrol, as well as limiting of VAT exemptions to imports, may drive inflation in the short term.
Overall, this shows our heavy dependence on taxes, as 95 percent of the budget is funded by taxes.
This makes the resuscitation of State-owned enterprises extremely urgent.
With Dr John Mangudya eventually assuming the helm at the Mutapa Investment Fund, which will assume shareholding of 20 key Stateowned enterprises (SOEs), turnaround of these entities becomes possible.
Remember, Dr Mangudya has dealt with most State enterprises in one way or the other as a Governor of the Reserve Bank of Zimbabwe (RBZ).
SOEs used to contribute more than 40 percent to the fiscus but are now a drain to the same. On the currency front, as Dr John Mushayavanhu assumes the reins at the RBZ in May 2024, we expect continuity.
We, therefore, expect a sound de-dollarisation roadmap, which Dr Mushayavanhu and the monetary policy team are expected to holistically follow.
Dr Mushayavanhu is a principled administrator and his reputation precedes him.
While growth and stability risk remain elevated, there is still scope to steer the economy to the intended destination. There is definitely need to judiciously manage our financial resources. A spirit of hard, honest work and sacrifice will help us ride the tide.
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Persistence Gwanyanya is an economist, chartered banker and member of the RBZ Monetary Policy Committee. He is also the founder and managing director of Bullion Group International. For feedback email: persgwa@bulliongroup.co.zw
What is it that they are targeting? Any specific targets? What is it that they want to achieve?
The targets must be specifics that have areas of achievements on their own.
Critical role of clusters towards Vision 2030
Thematic committees and clusters are essential in driving coordination and implementation of key national projects.
Clusters are essential for coordination of developmental programmes and promoting the spirit of unity amongst stakeholders.
The idea of clusters brings people together and fosters collaboration.
These structures bring together experts and stakeholders from various sectors to focus on specific thematic areas, such as agriculture, infrastructure, education or healthcare.
By establishing such committees and clusters, Zimbabwe can ensure a targeted and coordinated approach to development, leveraging the expertise and resources of relevant stakeholders to achieve desired outcomes efficiently.
This specialised collaboration will lead to greater efficiency, innovation and impactful results in each sector.
Enhancing evidence-based research and development
Evidence-based research provides a solid foundation for informed decision-making.
It involves rigorous analysis of data and information to understand trends, challenges and opportunities.
By utilising research findings, technocrats and opinion leaders, academics, policymakers and stakeholders, we can make informed choices, develop effective strategies and allocate
As Zimbabwe enters a novel era of hyper-connectivity, it is of paramount importance for the nation to give top priority to cybersecurity and data protection to ensure the nation’s growth and unification.
The internet and technology are becoming ubiquitous, which increases the risks of data breaches and cyberattacks.
Therefore, this means Zimbabwe must create a strong cybersecurity system that safeguards its people and companies.
Protecting personal data is a crucial component of bringing the country together in this era of hyper-connectivity.
Sensitive information is stored and transmitted online by individuals and businesses in an increasingly digitalised culture.
This covers financial information, personal information and private company data. Such data can be misused, manipulated or accessed without authorisation, which can lead to serious issues like identity theft, money losses and reputational harm.
To safeguard the security and privacy of its citizens and enterprises, the nation must devise all-encompassing optimal methods for educating its people about data protection laws and regulations. These regulations should clearly define the rules for gathering, storing and using personal data, as well as the obligations placed on businesses to protect it.
To guarantee that people are notified as soon as their personal data is compromised, a user-friendly and responsive data breach notification system should also be in place.
Creating a workforce with the necessary skills and knowledge is another essential part of using cybersecurity to unify the nation. The dynamic nature of cyber threats necessitates that professionals possess the requisite knowledge and abilities to properly tackle these issues.
To give people the tools they need to learn about the newest cyber threats, preventative measures and incident response
When harnessed appropriately, hyper-connectivity can be beneficial to the nation resources appropriately.
Evidence-based research ensures that decisions are grounded in facts and analysis, enhancing the likelihood of successful outcomes.
It also promotes innovation and learning, as research findings can uncover new insights and approaches to address complex issues.
Tools for aligning towards Vision 2030
To ensure effective alignment of efforts towards Vision 2030, various tools can be employed.
These include strategic planning frameworks, performance management systems, communication strategies and capacity-building initiatives.
Strategic planning frameworks provide a systematic approach to prioritise and coordinate actions, while performance management systems allow for regular monitoring and evaluation.
Effective communication strategies ensure that the vision’s objectives are widely understood and embraced by all stakeholders, while capacity-building initiatives equip individuals and organisations with the necessary skills and knowledge to contribute to the vision’s realisation.
To utilise these tools effectively, we need to invest in capacity-building programmes that enhance the skills and knowledge of individuals and organisations involved in the implementation of Vision 2030.
This may involve training programmes, workshops and mentorship initiatives that focus on strategic planning, performance management, communication and leadership.
Establishing platforms for knowledge sharing and collaboration will further enhance the effectiveness of these tools in aligning efforts towards the vision’s objectives.
Coordinated monitoring and evaluation framework
A coordinated framework is essential to facilitate effective collaboration and cooperation between different governmental bodies, private sector entities, civil society organisations and communities.
Fostering partnerships and creating platforms for dialogue will enable us to leverage diverse expertise, resources and perspectives to drive sustainable development across all sectors.
This framework should prioritise inclusivity and stakeholder engagement to ensure that no one is left behind.
We, therefore, need to establish clear channels of communication and mechanisms for information sharing among stakeholders.
Regular meetings, workshops and conferences can provide opportunities for collaboration, knowledge exchange and consensus-building.
Furthermore, creating platforms for public participation and feedback will ensure that the voices of all citizens are heard and considered in the decision-making process.
Routine monitoring
Monitoring and evaluation as a subject has been progressively evolving over the last quarter.
There is need for special trainings across the country — aligning all sectors of the economy through a properly structured routine monitoring programmes — to align everyone towards the Vision 2030 mix.
There is need for routine checks and balances to national projects, national development plans, State entities and Government structures to enhance the coordination matrix of monitoring and evaluation.
It makes the entire Government effective and lessen the burden and pressure on those implementing Vision 2030.