Last week Standardbusiness reporter Kudzai Chimhangwa (KC) interviewed the World Bank country manager Nginya Mungai Lenneiye (NL) who spoke about how the strategy fits into Zimbabwe’s development goals as well as the Bretton Woods institution’s recommendations on the country’s macro-economic framework.
Below are excerpts of the interview.
KC: What is the status of the African regional strategy that was launched in Zimbabwe last month?NL: The Africa strategy was endorsed by the World Bank board on March 1st, and is now being implemented. Specifically, the country assistance strategies are being assessed against the two pillars and foundation of the strategy.
Early results show that the focus on employment and on vulnerability, as well as the foundation of governance and public sector capacity, has proved valuable, especially in light of events in North Africa and in world food and fuel markets.
Furthermore, the strategy’s reversal of the traditional instruments has raised the profile of partnerships and knowledge, reflected for instance in a number of cabinet-level seminars on pressing policy issues in several countries.
KC: Is there anything for Zimbabwe in the strategy given that most of its rights have been curtailed due to its failure to repay loans to the World Bank?NL: Yes, Zimbabwe is an integral part of the strategy. We are engaged across a range of sectors in Zimbabwe through the Multi Donor Trust Fund and our own resources.
KC: Has Zimbabwe made any progress in clearing its arrears to the World Bank?NL: The government is discussing a Zimbabwe Accelerated Arrears Clearance Debt and Development Strategy (Zaadds) with multilateral creditors like the World Bank, the IMF, and the AfDB, donors and stakeholders.The strategy includes the possibility of drawing upon traditional debt relief instruments as well as the use of Zimbabwe’s natural resources for development. To begin the process, the government is validating and reconciling information on debt with creditors’ data.
KC: What can Zimbabwe do to attract direct foreign investment?NL: In the short term, it is important that the recently launched One-Stop Shop is fully functional in order to reduce the procedures, time, and cost to start a business.
- Chamisa under fire over US$120K donation
- Mavhunga puts DeMbare into Chibuku quarterfinals
- Pension funds bet on Cabora Bassa oilfields
- Councils defy govt fire tender directive
Keep Reading
Setting up a One-Stop Shop is not an end in itself. It is only a means to an end and needs to be part of a wider reform programme.With regard to trading across borders, the costs, time and procedures involved in importing and exporting goods are considerably higher in Zimbabwe than neighbouring countries.
Of particular concern is the time taken to clear goods at the border posts, as well as the cost involved. In this respect, documents and procedures need to be streamlined further.
In Zimbabwe, the time taken to obtain construction licences and permits, completing required notifications and obtaining utility connections is still relatively long. Best international practices show that not all construction plans require the same degree of scrutiny.
The absence of a public registry or private credit bureau is also an impediment for businesses to access good quality credit information and assistance. Zimbabwe needs, therefore, to establish a credit registry or bureau to allow the sharing of credit information. This would allow better assessments of the creditworthiness of borrowers, facilitating access to finance for viable small businesses.
Finally, Zimbabwe has a very low recovery rate on closing a business and the economy would benefit from a more efficient and faster bankruptcy and insolvency system.
In Brazil, for example, a 2005 reform of the bankruptcy system led to a 79% increase in long-term credit in the economy.
KC: Based on current economic performance levels, does the World Bank endorse the 9,3% economic growth rate forecast by government for this year?NL: In 2010, output growth was good, estimated at 9% supported in part by increasing world prices of Zimbabwe’s minerals and agricultural exports such as tobacco.
We expect the overall economic growth outlook for 2011 to remain positive, driven by growth in mining and rural sector.
However, the fast tracking of indigenisation in the mining sector and political uncertainties have created policy uncertainty and could slow down growth.KC: In your view, how crucial is political stability for Zimbabwe given the talk about elections this year?
NL: Zimbabwe’s economy needs significant private and public investment to recover from the years of decline. The national savings rate is currently low, and Zimbabwe therefore needs to attract and retain external capital.
