ZIMBABWE is to focus more on mining, tourism and agriculture to offset its economic decline, with a hospitality industry executive saying the sector will rebound in the second half on the back of increased tourist arrivals.
Experts say Zimbabwe, hobbled by liquidity constraints, is spending too much on recurrent expenditure such as civil servants’ salaries, leaving wider infrastructure funding gaps. The country’s infrastructure is in urgent need of rehabilitation to attract fresh capital, analysts add.
Zimbabwe Revenue Authority (Zimra) commissioner-general Gershem Pasi said on Thursday that most tax heads had surpassed targets for 2014 although “revenues were suppressed by liquidity challenges, company closures, and scaling down of operations”.
The revenue authority had a positive revenue collection variance of 1%, largely driven by mineral royalties, excise duties and value added tax. Zimra collected $3,84 billion in 2014, marginally surpassing its target of $3,84 billion.
Pasi pointed out that the “general poor performance of the economy due to various factors. . . had a negative impact on company profits”, which contributed to the failure of corporate income tax to meet expectations.
Corporate income tax collections were down 12% at $373,9 million.
Reserve Bank of Zimbabwe governor John Mangudya said on Wednesday that the central bank was mobilising resources to grow and boost key economic sectors which include mining, tourism and agriculture.
However, fund managers and economists say Zimbabwe needs to restore respect for property rights and urgently fix its regulatory and business frameworks.
“Our growth areas are in mining — gold, coal, platinum and diamonds — tourism and horticulture. We want to mobilise resources to support these sectors,” Mangudya said on Wednesday during a meeting with Zimbabwean media house editors and senior journalists.
The central bank earlier this year introduced bond coins to help price correction in the market, which had a lack of smaller denominated currency.
The bond coins were met with initial scepticism from a transacting populace spooked by fears that the government was gearing to reintroduce the Zimbabwe dollar.
However, Douglas Mboweni, chief executive officer of Strive Masiyiwa’s Econet Wireless, has said his company supported usage of the bonded coins although he added that electronic payment was a more effective way of fighting liquidity shortages.
“All our Econet stores accept bond coins,” he said.
“As Econet, we recognise our central role in economic development, and we are committed to working with all stakeholders.”
Although the central bank says tourism is one of the major drivers of Zimbabwe’s economy this year, African Sun chief executive officer Shingi Munyeza said on Thursday that “the domestic market was envisaged to remain depressed, exerting further pressure on rates and margins” for the hospitality industry in Zimbabwe.
Profitability for the company will only come towards the end of 2015, driven by an increased drop in sales and operating costs and improved foreign arrivals in the resort hotels segment.
The Zimbabwean mining sector has immense potential to grow, with most mining houses in the country such as Zimplats, Unki, Mimosa, Metallon Gold and now RioZim revealing plans to expand and boost production.
However, mineral prices have persistently been lower, pausing risks for the country’s over-reliance on mining.