(Ecofin Agency) - At the sidelines of the World Investment Forum he attended in Geneva, Switzerland, the Minister of Finance and Economic Development of Zimbabwe shared with us some of the secrets of his country's performance and economic prospects.
Ecofin Agency : According to the latest forecast on Zimbabwe's economy, growth could reach 4.5% this year 2018 and 5% in 2019. What could be the main drivers of such economic performance?
Pr Mthuli Ncube : First, the size of Zimbabwe's economy is larger than originally thought. We have readjusted the calculation base. Two weeks ago (around mid-October), we announced that the economy was 40% larger. The country's economic size has thus grown from about $ 18 billion to over $ 25 billion. In terms of economic growth in 2018, yes, we were expecting growth of 4.5%. We are now setting it at 6%, which is very good growth. What Stimulates the three key sectors I will say are mines, which are growing about 26%. Then agriculture grew by about 13% and then the construction sector by 14%. These are therefore the main drivers of growth in Zimbabwe. But also, the service sector has grown. The tourism sector is also showing strong growth, particularly in recent months. If you are going to Victoria Falls, it is not easy to find a room there. The hotels are almost full and we are witnessing this incredible change since the coming into force of the new regime.
EA: Although currently on the rise, commodity prices remain below their levels of three or four years ago. What strategy is put in place to strengthen the diversification of the economy, as you present it to us?
MN: Our strategy for economic diversification is based on the initial transformation that while prices may be moderate, the value of the product must be maximized. For example, if you look at the coal industry, we are working to turn it into fuel. If you look at the gas, it will be converted to fertilizer and, for lithium deposits, there is talk of not sending it to the battery manufacturers in its rawest form. So it's really about working on the valuation, regardless of the price level we will win. But if you look at these sectors and the whole economy, Zimbabwe is already a diversified economy. This means we are luckier than most countries because of our initial base that we have just transformed in depth.
EA: Banks in Zimbabwe have been asked to increase their minimum capital. How is the process going?
MN: The deadline is December 2020. In my opinion, therefore, banks have the time to bring their capital back to the required level, by finding new partners or by issuing rights, whatever their activity, to reunite their capital. And we are absolutely convinced that all our banks will meet deadlines.
EA: During your participation in this World Investment Forum, did you also promote your stock exchange, which works rather well?
MN: We are absolutely meeting at the World Investment Forum to discuss with potential investors from all sectors and therefore, even those who invest in the stock market in search of portfolio investments. I just wanted to say that we are starting with our privatization process, so more issuers will come to the market as a result of this privatization. It is important for us to introduce some of these companies to the stock market. There are about 11 state-owned enterprises that need to be privatized. That's our intention, because it's the easiest way to get ordinary Zimbabweans to participate, but also the diaspora, which is important, and the foreign investors. Going to the stock market is the key. But while we're here, we're talking to investors about foreign direct investment, getting long-term commitments and supporting infrastructure projects, as well as the electricity and agriculture sectors.
EA: With this new leadership in your country, what could you tell the community of international investors who would be looking for investment opportunities in Zimbabwe?
MN: I would like to tell them that Zimbabwe is open to business, they have to come and look at all the opportunities in different sectors, be it mining, agriculture, financial services, infrastructure and stock markets. We are establishing a one-stop shop to speed up the process of their Zimbabwe operations and their outings. In fact, we are partially opening up the capital account so that investors can now repatriate a portion of their income, with the establishment of a separate account that allows for more capital inflows and outflows.
Interview by Idriss Linge, in Geneva