ZIMBABWE should diversify its export basket and avoid primarily relying on the mining sector to drive economic growth in the short to medium term, a study commissioned by the World Bank has shown.
A report presented at a World Bank seminar on Wednesday showed that while mining has overtaken agriculture as the key economic driver since 2009, accounting for over 50 percent of total exports, the capital intensive sector unlike agriculture does not create many jobs.
“Relying principally on mining as a source of growth is likely to mute the poverty-reducing effects of growth without offsetting measures,” read the report titled “Trade in Zimbabwe: Changing incentives to enhance competitiveness.”
The report said that Zimbabwe’s tourism earnings were higher than Tanzania’s throughout the 1980s and early 1990s, but by 2011 they had fallen to 10 percent.
Services exports, the World Bank said were a logical source of new growth and diversification for landlocked Zimbabwe.
“The country has a relatively well educated and English-speaking labour force and numerous tourist attractions, and services are a rapidly growing segment of the global market. However, while other countries in the region have harnessed services export to their growth, services have largely stagnated in Zimbabwe,” it read.
Lack of long term capital to retool has made the manufacturing sector–which at peak in the 1990s contributed a fifth of the gross domestic product– become less competitive on the global market.
Speaking at the same seminar, World Bank country director for the International Growth Centre, Richard Newfarmer said the country requires tariff reforms to improve competitiveness.
He said lack of clarity on the indigenisation and empowerment regulations compelling foreign firms to sell 51 percent stakes to locals is discouraging foreign direct investments.
“The country remains dependent on a few commodity exports – and has seen an erosion of technological sophistication and labour intensity – exposing Zimbabwe to trade shocks and slow job creation,” Newfarmer said.
“The underlying reasons for this can be found in Zimbabwe’s policy framework – in investment climate, tariffs, ownership policies, transport, and services. Better policies can reverse these export trends,” he said.Advertisement
Responding to questions on indigenisation and empowerment regulations, Industry and Commerce director, Stanslous Mangoma said government was ready to lower the empowerment thresholds on a case by case basis.