Africa Development Bank (AfDB) says Zimbabwe has opportunities requiring minimal additional investment to realise medium-term growth targets.
Zimbabwe’s economy is projected to grow by 4.2% in 2019 and 4.4% in 2020 according to the African financier.
“In particular, measures are needed to increase transparency in the mining sector, strengthen property rights, reduce expropriation concerns, control corruption, and liberalize the foreign exchange markets,” AfDB’s African Economic Outlook 2019 says.
“Regeneration of civil society and a renewed engagement with political actors in a positive social contract will accelerate political reform.”
Another opportunity for Zimbabwe is to join existing supply chains in Africa through the Continental Free Trade Area according to AfDB.
“Given the vast natural resources, relatively good stock of public infrastructure, and comparatively skilled labor force, Zimbabwe has an opportunity to join existing supply chains in Africa through the Continental Free Trade Area,” the 2019 Outlook says.
“To take advantage of such opportunities, the government has adopted a three-pronged strategy based on agriculture, ecotourism as the green job generator, and special economic zones, growth pillars anchored on enhanced economic and political governance.”
Zimbabwe has a plan of creating Special Economic Zones to boost employment and manufacturing in the country.
Despite opportunities which AfDB sees, Zimbabwe’s economy remains challenged.
“The high and unsustainable debt-to-GDP ratio; the high fiscal deficit; the cash shortages, three-tier pricing, and limited availability of foreign exchange, which continue to constrict economic activity; and the persistent shortage of essential goods, including fuel and consumer goods, remain the major headwinds for any meaningful economic recovery,” the AfDB report says.
“Policy-related macroeconomic instability; lack of funding, land tenure, and investment regulations; high input costs and outdated machinery; inefficient government bureaucracy; and inadequate infrastructure (particularly energy) remain key challenges for private sector development.”
The country’s youthful population of 15-34 years in age, which accounts for 36% of the total population, remain unemployed and resort to informal trading.
Key drivers of Zimbabwe’s economic growth include the agricultural and mining sectors which are backed by private and public investment.
Zimbabwe’s government has adopted and is implementing prudent fiscal policy underpinned by adherence to fiscal rules, as enunciated in the Public Finance Management Act, together with financial rules according to AfDB.