Sunday, 29 November 2020

NEXT YEAR WILL BE BETTER, SAYS MTHULI NCUBE

Next year will be better for Zimbabweans with high expectations of job creation, consolidated economic stability and augmentation of social protection initiatives, the Minister of Finance and Economic Development, Professor Mthuli Ncube, has said.

In his National Budget presented in Parliament on Thursday, Prof Ncube projected Zimbabwe’s economy to grow by 7,1 percent in 2021, after a two-year slowdown.

The budget themed, “Building Resilience and Sustainable Economic Recovery”, is riding on milestones achieved under the Transitional Stabilisation Plan, which will be succeeded by the growth-oriented National Development Strategy (NDS 1) that runs from 2021 to 2025.  

In a document dubbed, “The Citizens’ Budget” accompanying the 2021 Budget, Prof Ncube was bullish about the year ahead, saying the financial plan had laid the foundation for a better life for all Zimbabweans.

“Yes, yes and certainly we will recover from past shocks. We are benefiting from the foundations we have created under the TSP. Government’s response is aimed at ensuring strong economic recovery, building on the milestones from the TSP and targeting additional support measures to cushion vulnerable households.”

Prof Ncube said Government plans to restore 150 000 jobs that were lost mainly due to Covid-19 in 2020. Government is walking the talk on devolution with $19 billion budgeted for 2021, a massive jump from the $2,9 billion allocated for 2020. Social protection is going to be enhanced with $5,5 billion allotted for vulnerable groups under the social protection cluster.

According to the document, agriculture is set to be the economy’s trump card as the sector’s overall GDP is expected to be 11,3 percent backed by a normal to above-normal rainfall season, improved access and timely financing of agriculture, timely provision of inputs, the Pfumvudza/Intwasa model as well as mechanisation support.

Mining will play a crucial role as it is expected to grow by 11 percent on the back of planned expansion programmes, increased capacity utilisation and favourable international commodity prices.

The electricity and water clusters combined are expected to grow by a massive 18,8 percent as a result of increased water capacity at Kariba, continued rehabilitation of thermal power stations, additional power from solar stations, completion of Causeway and Marovanyati Dams as well as increased exploitation of existing water bodies.

The construction, transport and communication, as well as finance and insurance sectors are all earmarked to grow by slightly over 7 percent.

Prof Ncube said prices are expected to remain stable as fiscal and monetary measures complement each other in containing inflation.

Experts who spoke to The Sunday Mail largely gave a thumbs-up to the $421,6 billion budget.  

Confederation of Zimbabwe Industries president Mr Henry Ruzvidzo said: “The budget strategy points to a focus towards production. The budget numbers, however, have a consumption spending bias and an emphasis on taxation to support the expenditure. A call to public entities to review fees and levies in line with economic developments can lead to unintended consequences. The commitment to macroeconomic stability and the foreign currency auction are important. Planned revival of some anchor industries notably steel, dairy and fertiliser is critical for value chain development. Attention is also extended to key enablers, water and electricity. The water supply situation in most urban centres is unhealthy and we welcome the intention to deal with the challenges.”

Economist, Professor Gift Mugano, said the 2021 Budget will further strengthen macroeconomic stability characterised by steady inflation, exchange rate stability and job creation.

 “Prof Ncube talked about stabilising the exchange rate to an average of below 135 percent in 2021. However, I believe by July 2021 it is possible that it will be below 100 percent because if in July 2020 the level of inflation was 837 percent and decreased to 471 percent in October, it means by July next year it would have declined even up to 100 percent.”

He said agriculture was a low hanging fruit that will be crucial to the creation of 150 000 jobs.

“A lot of jobs can be created from local agro-processing value chains in agriculture. However, there is a need for us to stop importing. We need value chains in most sectors of the economy especially agriculture and mining.”

University of Zimbabwe senior lecturer in the department of Economics, Professor Albert Makochekanwa, said the budget had given strong indications that Vision 2030 is attainable.

“In most middle-class countries, social protection is an important part of the economy and it is expected to form part of the budget. These are funds set aside to cushion the vulnerable in society, such as the elderly, people living with disabilities and hospitals. This shows the country is earnestly working towards the attaining a middle-income economy by 2030.”  

One of the sectors expected to see a massive boost in job creation is the motor industry, after Prof Ncube noted that Zimbabweans had spent about US$1,3 billion on imports of buses, light commercial and passenger motor vehicles from 2015 to September 2020.

A cocktail of measures announced in the budget such as the ban on imports of second-hand vehicles more than 10 years old and support to local vehicle assemblers will resuscitate the country’s motor industry sector.

Industrial Development Corporation of Zimbabwe (IDCZ) general manager Mr Ben Kumalo said the new measures will promote investment in the motor vehicle industry in line with the Zimbabwe Motor Industry Development Programme.

“The measures which include acquisition of most of ZUPCO’s bus requirements from local bus manufacturers, removal of the facility that favoured external procurement of buses by local transport operators, procurement of motor vehicles for use by line ministries and Government departments from local assembly plants, removal of waiver of duty or additional funding for imported vehicles and the imposition of an age restriction on second hand car imports will benefit the local economy in many ways,” he said.

Mr Kumalo said local vehicle assembly plants and bus manufacturers had the capacity to meet demand. AVM Africa group executive chairman Mr Kenneth Musanhi said the era of exporting jobs was over.

 “The support will go a long way in building our economy by backing our local vehicle manufacturing companies that will employ more local people who will pay tax to the Government. By not supporting local vehicle manufacturing companies, we were exporting our jobs and supporting foreign economies,” he said. Sunday Mail

 

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