Mthuli Ncube says Zimbabwean economy remains solid

Finance and Economic Development Minister, Professor Mthuli Ncube, has said the economy remains solid and on track to achieve projected growth rate despite threats of a subdued rainfall season as well as rising oil prices triggered by a war between Russia and Ukraine.

The economy is this year projected to grow by 5,5 percent anchored by increased mining and firming commodity prices, manufacturing and agriculture as a result of normal to above normal rainfall.

However, the current agricultural season has been marked by a false start in some areas and developments in Eastern Europe have since pushed up the price of oil and other commodities like wheat and maize.

Minister Ncube told journalists on the sidelines of the Zimbabwe Metal Casting Summit held in Harare on Friday that the government at the moment was satisfied with the performance of other sectors such as mining and manufacturing which have capacity to offset the threats.

"At the moment we are following the rainfall pattern and currently we have completed the first crop assessment and we are waiting for the second assessment so that we get a clearer picture from particularly the agriculture sector, which is a key sector in the economic growth matrix and its link with other sectors.

"But so far we are very pleased with the performance of other sectors such as mining, manufacturing, construction supported by the opening up of the economy with tourism picking up again largely driven by domestic tourism," he said.

In the 2022 national budget, the Finance Minister said this year's economic growth target would also be underpinned by subdued Covid 19 pandemic; relatively stable exchange rate and declining inflation.

However, Minister Mthuli said shocks on the global market that have resulted in imported inflation have had an impact in particular on oil and wheat prices.

"Therefore, we will only make a review in the second half of the year. But on the maize front, we have already allowed the importation of maize to allow Grain Millers to supplement their stocks," he said.

He noted that on fuel prices the Government will continue to watch and act appropriately in terms of the fuel subsidy programme through changing levies on fuel price.

"Therefore, we will continue to watch the situation and make appropriate communication in due course. But we have done our calculations and strategies on the fuel subsidy and we have actually been running this subsidy for the last five months and we had not publicly announced it but we have been doing it," he said.

He noted that the way the Government has done it is to reduce the fuel levy from 12,47 cents per litre to 8,7 cents per litre and we have done that to ensure we lower the surge in fuel price.

"If you notice since about October last year, the fuel price has been largely stable and we will keep it going for as long as we can afford it, but it is necessary to cushion consumers," he said.

On Mining, the Minister noted that prices of some of the commodities have also been rising and these include gold, nickel which will strengthen the country's export receipts and foreign currency.

"The tourism and construction sectors are likely to remain stable and support growth," he said. According to Minister Ncube, the economy is anchored on the National Development Strategy 1 (NDS1), which among other things aims to enhance mineral beneficiation and value addition through creation of value chains to anchor the national re-industrialisation policy, SADC protocol in mining and beneficiation of metals as envisioned under the Africa Mining Vision and in line with UN Sustainable Development Goals.

During the NDS1 period (2021-2025), the broad objective is to rebalance the economy by gradually improving the contribution of the secondary sector to GDP and increasing the contribution of value-added exports to total exports.

Speaking at the summit, Minister Ncube said the Government through NDS1 is aware of the need to re-industrialise and unlock Zimbabwe's metal casting industry in the short-medium and long term plans.

"If we extract mineral metals through mining, beneficiate these through tool making and die casting, we can begin to re-industrialise our economy," he said.

He said the Government sees opportunities to grow the industry and take advantage of various incentives that are available for all businesses that support import substitution and export generation.

Minister Ncube said the Government will fully support the promotion of import substitution of metals products through relevant policy interventions.