Zimbabwe Targets Average Annual GDP Growth of 6.6% by 2018Godfrey Marawanyika and Brian Latham
Economic growth to be boosted by agriculture, small businesses
Banking services to be expanded to about 90% of population
Zimbabwe, whose economy has halved since 2000, said it will boost output growth to almost 10 percent next year through agriculture and manufacturing, and by giving more people access to banking services.
The government is targeting an average annual growth rate of 6.6 percent between now and 2018, according to a document given to Bloomberg by the Finance Ministry. The economy is projected to expand by 9.5 percent in 2017 and 8.9 percent 2018, according to the document.
The sub-Saharan African nation needs to repay $1.8 billion of debt to the International Monetary Fund, the World Bank and African Development Bank to be able to resume borrowing as it seeks to revive an economy that the IMF projects will expand 1.4 percent this year. Zimbabwe, which has been led by President Robert Mugabe since 1980, is currently experiencing a liquidity crisis that’s led to limits on daily cash withdrawals and resulted in civil servants being paid late last month.
Growth will be sustained by “pillars” of the economy, such as agriculture and manufacturing, and the inclusion of very small businesses, according to the document. The poverty-reduction plan, which the government aims to implement after cabinet approval, will seek to provide banking access to at least 90 percent of the population by 2020, up from an estimated 69 percent now.
“Ordinary citizens still lack confidence in the formal banking sector because of the 2008 experience,” the Finance Ministry document says, referring to the era of hyperinflation, which reached 500 billion percent according to the IMF. That experience left Zimbabweans suspicious of both banks and Zimbabwe’s local currency, which was abandoned in 2008. The southern African nation now relies on the U.S. dollar, the South African rand, the yuan, the pound and the euro.
To improve confidence in banks and promote savings, the finance ministry will form savings and credit cooperative societies, according to the report.
While Zimbabwe’s mining and manufacturing industries continue to struggle, that’s largely due to low commodity prices and fluctuations in the value of the rand, the report said.
“The depreciation of the rand against the dollar in particular has weakened Zimbabwe’s competitiveness vis-a-vis its main trading partner, South Africa,” says the report. Zimbabwe remains a net importer, with a current account deficit of 22 percent of gross domestic product, it said.