Tinashe Makichi Business Reporter
The African Development Bank says Zimbabwe should implement policies that ensure access to credit to complement the performance of the manufacturing sector that has been showing signs of improvement since the beginning of this year. In its Zimbabwe monthly economic outlook for February, AfDB said positive developments were registered in the manufacturing sector as some firms have been trying to enhance their production capacity.
“Four manufacturing firms intend to invest about $27 million in their production processes. Policies that ensure access to credit and improve the general investment climate could complement such efforts,” said AfDB.
The financial institution said Zimbabwe’s economic performance in February was affected by the movements in international commodity prices, which in turn had an impact on Government revenue mostly from the mining industry.
On a month-on-month basis, the price of gold declined 1,70 percent from an average of $1 250,40 in January 2014, whereas the platinum price declined by 3,39 percent from $1 242 per ounce over the same period.
“The decline in international gold prices affects Government revenue from the mining industry. For example, this resulted in a decrease in the value of gold produced by the country from $626,1 million in 2013 to $614 million in 2014, despite the rise in output by 9 percent to 15,3 tonnes,” said AfDB.
Total gold deliveries increased by about 25,6 percent to 1 169,31kg in February, from 931,4kg in February last year. Deliveries by primary producers decreased slightly by 1,33 percent to 751,5kg in February, while deliveries by small-scale miners increased by 146,14 percent to 417,86kg during the same period. However, despite the increase in gold deliveries, total gold earnings are declining due to reduction in gold prices on the international market.
AfDB said this exerted upward pressure on domestic fuel prices, which had fallen over the past two months. Wheat price continued to soften in February, registering a high of $256 per tonne and a low of $243 whereas for the same period in 2014 wheat price reached a high of $311 and a low of $295 per tonne.
AfDB said this affected the uptake of wheat from local farmers, especially those who are not on contract farming, who have to sell to millers while the millers would prefer cheaper imports.
“Zimbabwe continues to operate under a difficult economic environment, even though there were some positive developments during the month of February 2015. Compared to other countries in the region, Zimbabwe continues to have the lowest inflation rate, which has since turned into deflation,” said AfDB.