Under the new dispensation of President Mnangagwa, Zimbabwe’s economic transformation is driven by a stable political environment, improved business confidence, re-engagement of bilateral investments in the country and anticipated turnaround from key economic sectors such as agriculture, mining, industry, ICT and tourism.
At the World Economic Forum in Davos this January, President Emmerson Dambudzo Mnangagwa put the global marketplace on notice that Zimbabwe is now “open for business.” Since coming into power last year in November, ED, as he is affectionately known, has made his intention clear that Zimbabwe has to discard its isolationist policies which led to the country being behind by nearly two decades. He has underscored the urgent need to pursue rapid economic growth and a trajectory of transformation. “Opening up Zimbabwe for business means that we can trade freely with the rest of the world and that we can access capital freely and invest more in the infrastructure,” says Lazarus Muchenje, CEO, NetOne. In this endeavour, this administration’s focus is on the pursuit of investment-led economic recovery, job creation while enhancing the ease of doing business, all moving towards the national vision to be a middle-income country by 2030.
Since his announcement, the spirit of the new dispensation has spread outside the borders and the nation has been hugely encouraged by the goodwill it has received from abroad. Dr. John Mangudya, Governor of the Reserve Bank of Zimbabwe, states: “We want to increase the footprint of business in Zimbabwe. It means that we are changing the narrative, from a closed economy to an open economy.” This renewed domestic and foreign investor confidence has seen Zimbabwe’s projected economic growth increase from 3.7% to 4.5% in 2018. Investment as well, keeps on pouring in with the country raking in a record-breaking, US$16 Billion in foreign investment since January. This upward momentum is underpinned by the positive performance in the agriculture, mining, industry, tourism and financial sectors, and is further spurred by increased revenue performance following the plugging of revenue leakages.
Agriculture to a large extent determines the potential growth of the economy and the sector accounts for 50% of employment in the country. Agriculture contributes 15% of the country’s GDP and accounts for 25% of total annual exports, with tobacco being the country’s single highest foreign currency earner. Building on the auspices of Command Agriculture, the current dispensation has geared itself towards continued food self-sufficiency and nutrition, and increased land utilisation and productivity, through mechanisation and modernisation of its agriculture sector. Hungry to re-establish the nation’s Bread Basket status in the continent, Mnangagwa is looking abroad to help reinvest within the country. The People’s Republic of China has pledged to assist in the drilling of boreholes throughout the country, while Russia and Belarus have made firm commitments to set up agriculture and engineering plants in Zimbabwe. “The government-initiated Command Agriculture has had a very positive effect,” states Peter Zimunya, Managing Director, CBZ Bank. “The support ignited interest in agriculture and now people are seeing its potential, including financial institutions which were doubting the profitability of the sector.”
DIGGING DEEPER INTO MINING
“This new mantra is a drive for the mining sector to attract the much-needed capital, to increase operational capacities, to have new investments in new projects, to have new money coming in for explorations,” states Hon. Winston Chitando, Minister of Mines and Mining Development. As one of the leading sources of investment and export earnings, the new dispensation has sent a clear message to investors by amending its Indigenisation Policy, limiting the 51:49% ratio to diamond and platinum mining only. Already, the nation has been inundated with multi-million dollar investments. The recently signed US$4.2 billion platinum investment agreement by Karo Resources is the largest investment in Zimbabwe’s mining sector to date and will directly create 15,000 jobs. Optimism remains high in the extractive sector with gold production projected at over 30 tonnes and 4.6 million carats targeted in diamond production for the first time since organised mining started. The country’s mineral exports for the first quarter of the year leapt by 12% to US$372.5 million, owing to the new dispensation’s policies.
MADE IN ZIMBABWE
Following definitive local and foreign investment commitments, the industry and the manufacturing sectors have witnessed a steady increase in capacity utilisation and notable expansion of some big brands such as Nestle and Pepsi. “The US$16 billion worth of foreign direct investment commitments to Zimbabwe show the country is ready for business and the economic turnaround is around the corner,” states Confederation of Zimbabwe Industries (CZI) president Sifelani Jabangwe. As the big contributor to forex in the country, Zimbabwe’s industrial sector needs to reduce its import bill and ramp up its capacity. Rhett Groves, Head of Corporate and Investment Banking, Stanbic Bank, points out that “if the economy opens up and we are able to structure lines of credit, we should have a very good pipeline in terms of resuscitating industry and commerce.”
“ ‘Open for business’ sets a tone to encourage a change in attitude,” states Jonas Mushosho, Group CEO, Old Mutual. “If we take appropriate actions, the country can experience an unprecedented level of improvement in its economy and its operative environment.” With vast natural resources and resilient human capital, Douglas Mboweni, Managing Director, Econet, believes that “ ‘Open for business’ is an obligation for us to become attractive” while Samuel Matsekete, CEO, Barclays Zimbabwe, affirms that “the mantra has resuscitated the creation of business.” While there is still much work to be done to leapfrog development, Mnangagwa’s pro-business call to the international investment community has already begun to bear fruit in such a short time.