HARARE – Government’s five-year economic recovery programme, the Medium Term Plan (MTP), has failed to achieve its set goals in the first year of implementation.
Tapiwa Mashakada, Economic planning minister, has blamed a poor agriculture season, contraction of the manufacturing sector, policy inconsistency, unremitting power shortages and inadequate funding among other challenges.
Though it has been touted by market watchers as one of the most brilliant economic blueprints to be produced in Zimbabwe since Independence in 1980, the MTP has failed to stimulate economic growth and reduce poverty in a country with one of the world’s highest unemployment rates, currently hovering above 80 percent.
“Evidence on the ground shows that implementation of MTP flagship projects and programmes is on course but adversely affected by inadequate funding,” Mashakada said at the launch of the first annual MTP implementation progress report yesterday.
“The national resource envelope, which has been the main instrument funding most of these projects is facing serious constraints caused by a rapidly shrinking capital budget and reduced fiscal space,” he said.
Launched in 2011, the MTP requires approximately $9,3 billion to be fully implemented, but lack of donor support, on which the blueprint was premised, has ensured that most of the targets are missed.
Mashakada said the downward revision of the 2012 Gross Domestic Product growth from a projected 9,3 percent to 5,6 percent due to agriculture’s poor performance had also affected the MTP’s economic growth target of 7,8 percent this year.
“Agriculture is the mainstay of the economy and once it underperforms it affects everything else. The MTP projected agricultural output to grow by 19 percent in 2011 but the sector only grew by 10 percent. For 2012 the MTP target was projected at 15 percent and has since been revised to -5 percent,” he said.
The manufacturing sector, one of the key economic growth drivers, also failed to perform satisfactorily this year resulting in the growth target being revised from seven percent to two percent.
Lack of medium to long-term finance, said Mashakada, limited lines of credit and liquidity among other constraints resulted in the sluggish performance of the manufacturing sector.
“The mining sector is estimated to have grown by 43 percent in 2011 which was lower than the MTP target of 44 percent. For 2012, the growth of the mining sector has been revised downwards to 10 percent, which is again lower than the MTP target of 20 percent,” he added.
“Measures have been put in place to encourage value addition. Ten percent of all rough diamonds produced in the country was reserved for local cutting and polishing industry and quota to be increased as diamond industry grows and export of chrome ore banned to promote local beneficiation.”
Mashakada noted that key enablers such as energy, transport, water and sanitation, small to medium enterprises (SMEs), Information and Communication technologies among other factors which were central to achieving MTP targets underperformed making it difficult to achieve the various sectoral targets.
The situation was worsened by lack of legislative and institutional framework for public-private partnerships.
“There are however, some positive developments which should spur the growth of the economy.
“These include, the 500 million pula lines of credit which was operationalised in September 2012, following the signing and ratification of the Zimbabwe-Botswana Bippa.
“Local industries can now immediately utilise this facility,” he said.
“The hosting of the UNWTO annual general assembly together with Zambia next year should bring both direct and indirect benefits to the country.”
Lin Lin, Chinese ambassador to Zimbabwe, said while there is some notable progress in the MTP, there was need for serious implementation.
“To formulate a plan is one thing while implementing is another.
“Zimbabwe is a God-blessed country that has a huge potential for future development and we believe the country can find its own way of development which suits its own conditions,” said Lin.
Sam Malaba, Bankers Association of Zimbabwe vice president and also Agribank Limited chief executive, said the country must clear its external debt first for the MTP to work efficiently.
“We need to access external lines of credit but we cannot do that at the moment unless we deal with our arrears,” said Malaba, who is also chief executive for Agribank.
Zimbabwe’s external arrears to multilateral finance institutions is currently in excess of $10,7 billion.
Isaac Kwesu, chief economist for the chamber of mines said while there are some positive strides in the MTP policy inconsistencies were hampering economic growth. – John Kachembere