Zimbabwe is set to create more formal jobs through a combination of incentives and lines of credit mainly targeting the agriculture and manufacturing sectors, officials have said. Briefing the media ahead of 2020 budget, Finance and Economic Development Minister Professor Mthuli Ncube, said some proposals meant to enhance job creation would be announced next Thursday when he presents the fiscal policy in Parliament.
Job creation is among key pledges made by the new administration as part of efforts to transform the economy where about 80 percent of employable population does not have formal jobs with the majority surviving on informal activities.
He said with the austerity measures now over, next year’s budget was expansionary with priority now shifting towards stimulating the economy and create jobs.
“We are now looking at enhancing productivity and growth, competitiveness and job creation,” said Prof Ncube.
“And in the budget, there will be something on jobs, specific proposals on jobs including rebates. We are gearing for . . . job creation.”
Prof Ncube did not give a target number for new jobs or money to be used solely for job creation.
Some Treasury officials told Business Weekly that the proposals would largely entail incentives and access to credit mainly to the agriculture and manufacturing sectors.
“It’s not only about money but measures to stimulate growth and the trickle down effect will be job creation,” said the official who requested not to be named.
Sluggish aggregate demand due to hyperinflation has resulted in job losses as companies are being forced to scale down, according the Confederation of Zimbabwe Industries, a lobby group, which represents manufacturers.
This has been compounded by production stoppages due to prolonged period on power cuts.
Some analysts say the biggest incentive that the fiscal authorities should offer to business and productive sectors was a stable operating environment.
“All other incentives, be it in taxes or lines of credit, will be a waste of resources and effort as long as the operating environment is plagued by very high inflation and a very unstable exchange rate,” economist Brains Muchemwa told Business Weekly.
“The obtaining high inflation level, on its own, is a huge disincentive for investment and job creation and there are no corporates that will be able to protect their balance sheets, let alone create additional employment at a time real consumer demand is being eroded by inflation.”
The Reserve Bank of Zimbabwe assumes monthly inflation will drop to between 10 and 12 percent by year-end though indications are pointing to the contrary.
It said achieving a stable currency and low levels of inflation was possible if Government remains disciplined. The economy will contract by 6,5 percent this year due to the effects of drought and Cyclone Idai, basic economic fundamentals “remain sound” to meet the country’s stabilisation.
Prof Ncube said the effects of two cyclones experienced this year has serious effects to overall performance of the economy.