EDITORIAL COMMENT: Economic growth projections a boon for Second Republic

WITH rains now falling after a late start to the season, Zimbabwe’s economic growth is expected to hit 6,2 percent this year according to the World Bank, well above the 4,1 percent sub-Saharan African average and around the level already predicted by the Government.

The importance of the World Bank prediction, which backs the Government’s own 6 percent, is that it shows the Ministry of Finance, Economic Development and Investment Promotion is, if anything, exceptionally prudent when compiling its figures and predictions and does not resort to wishful thinking or political propaganda.

It reports facts and is professional in its estimates and predictions.

Since assuming office, the Second Republic has been open with both the World Bank and the International Monetary Fund, ensuring that they have access to national economic figures, which are hardly a secret, and can check how the Zimbabwe Government follows its laid-down policies of fiscal and monetary discipline.

While Zimbabwe has been locked out of much multilateral financing through the illegal financial sanctions, it has restored relations with the major multilateral finance organisations and has adopted policies that will be needed once we can once again access the capital funding that we require.

Private sector investors are now a major part of the new Zimbabwean economy, also want to know how the Government is managing the economy, and when the figures are confirmed by the World Bank or IMF this is a bit like a favourable audit report in the private sector, a routine check that you are dealing with people who know what they are doing and honour their word.

The slump in growth last year to two percent was almost entirely due to the worst drought for 43 years and the resulting major decline in dryland agriculture.

Agriculture had negative growth, quite sharp negative growth, and while this was partly counterbalanced by growth in all other sectors, hence the final total of two percent growth, obviously the dip in one of the major sectors would have an effect.

However, it should be noted that despite the very serious drought and crash in harvests of many crops, the economy still grew in total, showing the robustness of the economy we have now achieved.

This growth also took into account the fall in prices of most minerals except gold, so the growth in mining output was driven more by increased volumes and more local processing to add value than by prices.

While the 6,2 percent growth predicted for this year assumes a reasonable season for the summer dryland farmers, since a chunk of that growth is restoring harvests and then setting some new records in output, it is not reliant on that recovery.

We have had back-to-back droughts in the past and if we had hit that this season it would simply have meant agriculture would not grow much, rather than decline, and so the full effect of the growth in mining, manufacturing, tourism and services would be seen without any further decline in farming.

In fact the drought has helped to accelerate the growth in irrigation, as it has now become obvious that we cannot rely, year after year and season from season, on rain-fed farming.

We need to grow at least our own food even in a drought year, and we need to give ever larger percentages of our farming families access to irrigation, or at least supplementary irrigation, so they can cope with dry spells and drops in rainfall.

There are growing gaps between farmers with and without access to irrigation.

Even this season, farmers with irrigation managed to establish crops earlier and get through the early and middle December dry spell with losses as they switched on the supplementary irrigation.

They are now using free rain, rather than paying for irrigation, helping to control their costs, but also demonstrating the continuing need for improving access to at least partial irrigation for all farmers.

Normally a lot more land can be given supplementary irrigation than full irrigation, since even in the worst drought at least half the normal rain falls and usually we do better than that, even in bad years.

But this does require more flexibility in the infrastructure so that modest amounts of irrigation water can irrigate more hectares when there is at least some rain. Irrigation is not all or nothing.

More rain also increases energy generation. The two Kariba power stations were operating as basically drought flows run-of-river schemes for much of last year, as there was nothing worthwhile in storage above the minimum levels needed to ensure the valves leading to the turbine were under water.

Run-of-river means that what came over the Victoria Falls during the dry seasons was what flowed into the lake and what could then exit the lake through the two power stations.

This allowed, with the drought hit flows, each to generate just 124,5MW, with Zimbabwe using the equivalent of one of the original six turbines and nothing from the newer two, and Zambia cutting back to around 80 percent of one of its slightly larger original turbines and nothing from the new ones.

With even moderately better rains in the main catchment, southeast Angola, there will be a stronger flowing river as well as some floods adding to the storage.

And quite a bit of the private generation capacity is coming on stream this year in Zimbabwe, adding to growth and far more importantly ensuring that other sectors, and in particular mining and manufacturing, can grow without energy bottlenecks.

Investors need to know there will be electricity, or need to take into account the need to generate some of their own requirements which in turn requires easy registration and building of power stations, solar or coal. The Government has managed to meet those conditions and has sorted out pricing formulas that make private power stations a worthwhile investment without crippling the eventual customers.