Zimbabwe’s vision to become a middle-income economy by 2030 is achievable if the government invests in productive sectors and implement policies that encourage investment as well as entrepreneurial development, analysts have said.
BY MTHANDAZO NYONI
Recently, President Emmerson Mnangagwa revealed that Zimbabwe was going through the primary stages of a radical economic transformation that would see the country becoming a middle-income economy by 2030.
According to the World Bank, a middle-income economy is one with a gross national income ranging between $1 005 and $12 235 per capita.
Currently, the World Bank classifies Zimbabwe as a low-income economy.
Economic analysts and industrialists who spoke to Standardbusiness last week said the vision was achievable but government should invest in productive capacity supported by good infrastructural investment.
“To achieve that level of investment, Zimbabwe needs first to remove a self-imposed handicap.
“As a country, Zimbabwe denies its citizens the right to use its own agricultural land as security for bank loans,” economic analyst John Robertson said.
“Land that should be worth many billions of dollars is declared by the State to have no value at all, so the billions of dollars that might have been lent by banks has been reduced to a trickle.”
He said to have sound collateral value, the land needed to be easily transferrable to a new buyer if the borrower fails to repay money lent by a bank.
“That pressure on the borrowers makes them so much more determined to succeed that their efforts make the whole country more prosperous,” Robertson said, adding that the 99-year lease agreement proposed by government would make ownership transferability as well as the valuation of the land so complicated that the banks could not work with them.
“If they are put under pressure to lend, they won’t lend very much and the borrowers’ commitment to repay will be undermined by their lack of success,” he said.
Robertson said if Zimbabwe were to put all agricultural land into a properly functioning market, it would soon attract investment inflows that would be supported by international institutions lending to local banks.
“Being able to offer a very high quality of collateral to lenders would unlock flows of billions of dollars from abroad and bring within reach Zimbabwe’s hopes of becoming a middle-income country very quickly,” he said.
Another economic analyst, Reginald Shoko, lauded the vision saying Zimbabwe had been operating on five-year programmes.
He said the vision was attainable if there was an enabling environment, state enterprises were revived, the country focused on sectors where it enjoyed comparative advantage like agriculture, mining and tourism and the development of sustainable value chain industries.
“Government also needs to adapt to the prevailing trends,” Shoko said.
“Ours has been a nation that has focused mainly on political advancement over economic development.
“This continuous election mode must stop and improve our fight against corruption both in the public and private sector.”
Speaking recently at the Bulawayo Investment Conference, former Confederation of Zimbabwe Industries president and industrialist, Busisa Moyo said industries needed to multiply their income and productivity tenfold for Zimbabwe to become a middle-income country.
“To simplify this, it means that we need to multiply our turnover,” he said.
“If you are a company that is generating $1 million, in order for us to reach middle income status, we need to get to $10 million.
“If you are a company that is generating $10 million, you need to go to $100 million.
“We need to multiply our productive efforts by at least 10 in the next 12 years to become a middle-income country.”
Moyo said a middle-income country was one where workers got between $2 511 and $12 000 per annum or $1 000 salary a month.
“There are too few of us that are at middle-income level and we need to pull the whole country out of poverty,” he said.
“In China, they pull 30 million out of poverty every year, just to give an idea that it’s possible. other countries are doing it. If they did it, why can’t we do it?”
Speaking during a workshop organised by the Engineering Iron and Steel Association of Zimbabwe last week in Bulawayo, Reserve bank deputy governor Kupukile Mlambo said the central bank was tasked by the Ministry of Finance to work towards transforming Zimbabwe into a middle-income country by 2030.
“People say we are in a new dispensation, but as a central bank we say we are in an economic dispensation. It’s critical for us because what we are trying to do we are saying what sort of a country we need to see in the next few years,” Mlambo said.
“It means that we want to have an economy that attracts investment. For a long time as a country, we have been failing to attract significant investment.”
Mlambo said other countries were getting between $2 billion and $3 billion a year in foreign direct investment but Zimbabwe was only attracting around $300 million.
In 1980, Zimbabwe was one of the preferred destinations for foreign investment, he said.