Zimbabwe leads, Sub-Sahara follows

Zimbabwe leads, Sub-Sahara follows
Published: 17 May 2017 (585 Views)
Zimbabwe's economy has maintained a downward toll over the past decade. However, a glimpse of hope beams on the country's economy evidenced by the recent 2% positive prediction by the International Monetary Fund (IMF) in a recent survey.

While detractors concentrate on negatives prevailing in the country, the country has been mopping up strategies, adaptations and policies to revamp its economy, a discourse yet to be implemented by other African nations.

According to IMF's Regional Economic Outlook report, titled Restarting the Growth Engine; growth in the region will barely deliver any per capita gains lest African governments implement strong and urgent policy reforms to boost growth, something which the Zimbabwean government has already done.

Under the Zimbabwe Agenda for Sustainable Socio-Economic Transformation (ZimAsset) programme, most of the grand submissions by IMF think tanks are already in motion.

The region's growth is said to have slowed sharply in 2016, averaging 1.4%, the lowest in two decades as about two-thirds of the countries in the region which account for 83% of the region's Gross Domestic Product (GDP) slowed down. Sub-Saharan population growth averaged 2.7 %, according to a 2015 World Bank estimate.

As such, Africa is supposed to adopt new business models and policies which promote import substitution, limit raw material exportation, formalizing the informal sector, ultimately leading to economic growth.

According to IMF, the delay in implementing critical adjustment policies will lead to higher public debts, creating uncertainty, holding back investment, and risks generating deeper difficulties for most African economies in the future.

All these inferences to import substitutions and adopting the informal sector are something Zimbabwe has gone through and already perfect tuned through Zim-Asset, a leaf for sub-Saharan Africa to pluck from.

Commenting on the same report, Nigerian Minister of Finance, Kemi Adeosun acknowledged Nigeria being one of the several countries in Sub-Saharan Africa to be hard hit by an economic crisis in 2016.

"With the anticipated African economic rebound in 2017, there was need for the region to adopt a new business model driven by import substitution strategies to localize production, create jobs and achieve sustainable growth," she said.

Given the size of the informal sector and its contribution to employment and household income in the region, Mrs Adeosun called for improvement in policies in the sector to realize its full potentials.

The business model of extracting and exporting raw commodities with little or no value addition should be jettisoned for a broad based growth model is well catered for under the value addition and beneficiation cluster, something which Nigeria intends to emulate.

Recent improvements in commodity prices, provides welcome breathing space for most African economies. However, it will not be sufficient to address the existing imbalances in resource-intensive countries.

Among other strategies to be implemented, the report acknowledges that while Africa's economy is expected to grow by 2.6% this year, it is still not enough to keep up with the continent's growing population, hence the need to implement measures to espouse economies.

The report also acknowledged the growing importance of the informal sector as a safety net providing employment and income in Africa.

"The informal economy is an important component of most economies in the region, contributing between 25 and 65% of the Gross Domestic Product (GDP) and between 30 and 90% of total nonagricultural employment," read the report.

"International experience suggests that the informal economy in sub-Saharan Africa is likely to remain large for many years to come, presenting both opportunities and challenges for policymakers," it added.

Countries like Senegal and Kenya are expected to continue to experience growth rates higher than 6 percent while Zimbabwe is forecast to grow at 2%. In a previous outlook published last October, the IMF had forecast a contraction of 2, 5% in Zimbabwe's economy, clearly, they were wrong.  

The IMF also acknowledged economic rebound in agricultural production in Zimbabwe, something which has been driving the country's economy.  Zimbabwe seems to be at the fore front of innovations, while others follow.



- Rungano Dzikira

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