eBusiness Weekly
Africa Moyo
The fiscal and monetary reforms set in motion by Government, particularly the deliberate plan to transform State-owned Enterprises, and allowing market forces to determine the exchange rate, are expected to see the economy growing “exponentially” from this year going forward, a top African Development Bank (AfDB) official has said.
To catalyse the growth, the AfDB is planning to avail a US$500 million Transitional Stabilisation Facility, designed for the local private sector.
AfDB executive director representing Southern Africa Group II Constituency, Heinrich Mihe Gaomab II, who has been in Zimbabwe since Monday, said this in response to questions from journalists in Harare on Wednesday.
Gaomab II was assessing the Bank’s projects in the energy and water sectors.
“The macro-economic indicators are showing an element of ‘positiveness’. The economy is on an upward trajectory; the growth trajectory looks very good.
“The reforms will take Zimbabwe on a growth trajectory, very exponential growth not just stable. We are encouraged by that,” said Gaomab II.
He said the AfDB was encouraged and “very positive” about the macro-economic reforms being undertaken by Government. AfDB has largely been excited by the “strong fiscal consolidation efforts as well as effective domestic resource mobilisation”, said Gaomab II.
He believes reforming SOEs would transform the economy in a massive way.
Almost all SOEs are recording losses, with the bulk of them being insolvent, and depending on Government bailout for survival while bosses take huge salaries and perquisites despite the abject performance of firms.
Government says 41 firms have been lined up for reform, with some set for Zimbabwe Stock Exchange listing while others would be merged.
Some of the companies, especially those that demonstrate no sign for turnaround, would be guillotined.
This would significantly cut Treasury support for such loss making entities.
Dumping 1:1 forex rate key
Gaomab II said the Monetary Policy Statement announced last week by Reserve Bank of Zimbabwe (RBZ) Governor Dr John Mangudya was “positive”.
The MPS spoke to several issues that industrialists had been lobbying for, for a long time, especially on foreign exchange rates. “We are of a very positive view that such policies will take Zimbabwe on a positive growth trajectory,” said Gaomab II.
Dr Mangudya dumped the 1:1 exchange rate, which had caused chaos on the market as exporters reportedly chose to keep the money while forex coming in from Diaspora remittances, also found its way to the parallel market where “favourable” rates of up to 1:3,5 were offered.
Now the forex exchange rate is determined by market forces.
US$500m TSF support
Gaomab II says as the economy looks to overcome its challenges, the AfDB intends to release $500 million to capacitate the private sector. “. . . we have a Transitional Support Facility; we would release a resource envelope for Zimbabwe and we are looking at it, at the African Development Bank,” said Gaomab II.
“It could be ranging up to US$500 million. It can only be more, it can only be better. It will afford an opportunity to the private sector and we are very encouraged with that releasing of a financial space for Zimbabwe.
“It’s something that we want to assist Zimbabwe (with) and this amount will eventually be afforded to the private sector.” Private sector growth is Government’s new battle-cry, as opposed to Government led economic growth.
The AfDB has supported several projects in the country and has provided stabilisation packages to support economic growth.
