Government anticipates the economy to grow by 9,4% this year spurred by improved agricultural, tourism, mining, and manufacturing sector performance while the Medium Term Plan (MTP) will be used as a guiding tool.
UNDP Economic Advisor Udo Etukudo told Standardbusiness that the growth projections must be backed by policies that are both predictable and consistent.
“Regarding weak investment inflows, Zimbabwe’s huge debt arrears estimated at US$7 billion, as well as its difficult relations with the donor countries are major factors. These need to be addressed as a matter of urgency,” said Etukudo.
He said clearing debt arrears would pave the way for new capital injections into the economy, as well as help change international perceptions among foreign investors looking to invest in Zimbabwe.
“A resumption of dialogue with the International Financial Institutions (IFI’s) and the Paris Club of creditor countries is the kind of signal needed to trigger a movement in that direction,” he said adding that there is need to create a competitive business environment.
However, despite Zimbabwe’s economic stabilisation and slight improvement in capacity utilisation levels in the manufacturing sector brought about by the creation of the inclusive government, unemployment has continued to soar.
Etukudo said capacity utilisation had risen five-fold in the last three years, from around 10% in 2008 to around 58% in 2011, but employment levels have not improved.
“At the same time, unfortunately, employment levels have not improved significantly to match the rebound in capacity utilisation. Part of the explanation lies in the rapid recovery of the services and tourist-related industries, compared with a much slower recovery of manufacturing industry,” he said.
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“The productive sectors, particularly manufacturing, is where the bulk of employment generating capacity lies. Another explanation lies in the changing nature of jobs as firms retool and adopt new technologies, which require a different skills set from that which prevailed in the past,” said Etukudo.
He said that the implications of this scenario meant the need for massive public investments in human resource development, while investment should be intensified in those sectors with a high impact on employment creation.
Etukudo said that in order for recovery to remain on the trajectory as set out in the MTP, greater efforts on the part of government would need to be directed at ensuring that economic growth is inclusive. He said there is need to ensure that Millennium Development Goals (MDG) targets are met by 2015.
The MTP says conditions critical for continued recovery of economic growth over the medium term include active private sector involvement in the productive sectors of the economy; improvements in the supply of electricity; increased usage of IT-based technologies; and greater value-addition in the extraction of minerals among others.
The UNDP noted that the operationalisation of the MTP through the budget and sector-based strategies coupled with action plans should further clarify the air on all policy matters and concerns.
The UNDP is presently working with government to help strengthen economic management in broad terms. Its interventions seek to facilitate the formulation of national development plans and strategies; improve the environment for policy-planning and investments; and upgrade the skills of technical staff.
In addition, through the Ministry of Finance, UNDP seeks to strengthen public finance management and its information technology-based information systems; improve the coordination of external aid flows for development effectiveness; and improve debt management.
Zim showing positive economic recovery trend
UNDP statistics indicate that the country’s economic recovery is showing a positive trend as nominal Gross Domestic Product continues to rise sharply, from US$5,8 billion in 2009 to US$8,2 billion in 2010 and US$10 billion at the end of 2011.
“This represents a 72% rise in economic production between 2009 and 2011, and thus providing clear evidence of progress according to the UNDP.
“However, the challenge of employment creation remains,” he said.
