Mugabe sees options from Zim fund to BRICS loansComment on this story
Harare - Zimbabwean President Robert Mugabe is considering raising finance through measures ranging from establishing a sovereign wealth fund to borrowing money from the so-called BRICS nations to revive Zimbabwe’s economy.
A document titled the Zimbabwe Agenda for a Sustainable Socio-Economic Transformation, or Zim Asset, also details plans including the sale of bonds, securitisation of remittances, re-engagement with international finance institutions and the creation of special economic zones.
Financing options should focus on Brazil, Russia, India, China and South Africa, a group of large emerging market nations collectively known as BRICS, according to the document signed by Mugabe and obtained from the Ministry of Finance on November 15.
“My government has formulated a new plan,” Mugabe, 89, said in the foreword to the 129-page document, which details a five-year plan stretching to 2018 for the economy.
The plan is designed to “enable Zimbabwe to achieve economic growth and reposition the country as one of the strongest economies in the region and Africa.”
Mugabe, who won a July election to extend his 33 years in power, is struggling to revive an economy that shrank by 40 percent between 2000 and 2008 after the seizure of white-owned commercial farms slashed exports, inflation surged to a world record and relations with the International Monetary Fund were severed.
The Zimbabwe African National Union-Patriotic Front party won control of parliament in July after a five-year coalition with the Movement for Democratic Change, which arrested a near-decade long recession.
Measures taken by the coalition included the abolition of the Zimbabwe dollar in favour of the use of currencies including the US dollar and the South African rand.
The country has the world’s second-largest deposits of platinum and chrome and reserves of minerals ranging from coal and iron ore to gold.
Still, investment has been inhibited by a law compelling foreign and white-owned companies to sell or cede 51 percent of their local assets to black Zimbabweans or the government.
Anglo American Platinum Ltd., Impala Platinum Holdings Ltd. and Barclays Plc are among companies that operate in the country.
The “economy experiences a myriad of challenges, which, if not addressed, will reverse the marginal gains recorded,” the government says in the document.
Economic growth has slowed from 11.9 percent in 2011 to an estimated 3.4 percent this year, while manufacturing capacity utilisation was 39 percent in the third quarter of this year compared with 57 percent in 2011, according to the document.
The country has a housing backlog of 1.25 million units, while water, sanitation and rail systems have deteriorated, the government said.
Under the plan, economic growth is targeted at 6.2 percent next year, rising to 9.9 percent in 2018.
Government institutions ranging from an agricultural bank to the state mining company will be recapitalised, the government said.
Debt amounting to $80 million owed by farmers to the state power company will be cancelled while biofuel and sugar projects will be implemented.
The government also plans to seek investment to restore existing power plants to their full capacity, adding 300 megawatts of production by 2015, while developing a new 1,600 megawatt hydropower plant on the Zambezi River and a smaller project on the Gairezi River.
Coal-bed methane gas at Lupane may also be utilised for power generation while the Sengwa coal- fired project, a plant once considered by Rio Tinto Plc, may be developed.
Renewable power projects planned include a 100-megawatt solar plant, solar water heaters and mini-hydro power projects.
The government will also seek to restart a steel mill to produce 700,000 metric tons of liquid steel annually and to attract new investment to that industry.
“The government will continue with the ‘look east’ policy to unlock the inflow of potential investment,” it said in a reference to attempts to garner investment from China and India.
Last week the Export-Import Bank of China agreed to lend Zimbabwe $319.5 million to expand the Kariba South hydropower plant.
The government plans to target increased production of corn, wheat, milk, meat and eggs as well as boosting the amount of irrigated land and putting in place tariffs to reduce dumping of agricultural products, it said.
Agricultural projects planned include fruit juice, honey and avocado-oil plants
The construction of 12 dams and three water pipelines is envisaged as well as the completion of existing pipeline projects and the rehabilitation of urban water supply systems.
It also plans to identify companies to be taken over by the government or black Zimbabweans and assess which mining exploration concessions are not being utilised.
The production and polishing of 1.2 million carats of diamonds a year is set as a target.
A second fuel pipeline from the Mozambican port of Beira is planned as is the development of a biofuels policy, which would include the planting of jatropha and the expansion of sugar cane plantations.
“What is critical for this document is funding and that appears to be the missing link,” Best Doroh, chief economist at ZB Financial Holdings in Harare, said in an interview.
“They did a decent job in identifying what needs to be done and in identifying the issues but the key component of funding has to be addressed.” - Bloomberg News