Zimbabwe potentially a land of milk and money – Biti


    Addressing participants at a Zimbabwe capital markets conference, Finance Minister Tendai Biti said the country was endowed with over 40 minerals which were ready for the picking, the existing infrastructure was in place and only needed some maintenance, and the labour force had at least four years of secondary education.

    He said the country also had liberal labour regulations based on collective bargaining.

    "Zimbabwe requires between $45-billion and $47-billion to get back to its peak level of 1996/97," Biti said. "The resources, the wherewithal and the workforce are all there, but what is missing is the investment to get the country back on the rails."

    Biti gave a breakdown of the sectors where investors could do business, ranging from mining, agriculture, agro-processing, tourism, and downstream mineral beneficiation.

    "Agriculture is Zimbabwe’s engine for growth, considering its background and forward linkages to other sectors, and there is a need to support the sector," Biti said.

    "Opportunities also exist in the beneficiation of minerals, such as cutting and polishing of diamonds, jewellery manufacturing and tile manufacturing, quarrying and mineral exploration."

    Biti said the energy sector was crying out for refurbishment of electricity generation plants. The water supply and reticulation sub-sector was in dire need of rehabilitation. He said the transport sector would benefit from an improvement in the road network.

    He added there was also need for improvement in public service delivery, particularly in areas of water and sanitation, transport, health and education.

    Zimbabwe’s economic outlook is looking up, but the country needs to institute structural reforms around tenure system and address rigidity in the labour market, the International Monetary Fund (IMF) says.

    This comes after an IMF team last week met Finance Minister Tendai Biti and Economic Planning Minister Tapiwa Mashakada and central bank chief Gideon Gono, among other government officials.

    Kramarenko sees the 2011 budget generating a cash surplus.

    Although Zimbabwe’s economy is on an upside, Kramarenko says government should strengthen the business climate.

    "Regarding favourable shocks, higher gold and platinum prices boosted exports and government revenues, a significant appreciation of the rand has eased competitiveness pressures, and favourable weather conditions have contributed to higher agricultural output."

    He added that Zimbabwe should reduce both internal and external financial vulnerabilities.

    The IMF mission also urged government to keep its spending under US$2,5 billion saying the budget will be broadly balanced.

    Kramarenko added: "Under the current IMF World Economic Outlook assumptions for commodity prices, it is projected that the budget will be broadly balanced in 2011. To create fiscal space for higher capital expenditure and social programs, it would be critically important to start eliminating ghost civil servants. As commodity prices are high at present, transforming part of the accumulated government deposits in the domestic banking system into international reserves would create a cushion against future possible shocks.

    "Risks in the banking system have eased since early 2010. Strict supervisory vigilance and early intervention in case of non-compliance with prudential rules remain the authorities’ only tools to contain solvency and liquidity risks in the system.

    In that context, strengthened liquidity requirements would make the banking system more resilient to shocks. Recent efforts to downsize and restructure the RBZ are welcome. In the interest of financial stability, banks’ statutory reserves should be given preferred status in the resolution of RBZ liabilities." – Additional reporting by the Independent and Sunday Times