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Zimbabwe country profile: SADC Trade, Industry and Investment Review 2006
Southern African Development Community (SADC)
May 2006

http://www.sadcreview.com/country_profiles/zimbabwe/zimbabwe.htm

Zimbabwe, being one of the founding members of the Southern African Development Community (SADC) then Southern African Development Coordination Conference (SADCC) is committed to the ideals and agreed programmes of the regional integration organisation.

Zimbabwe recognises the importance of regional economic integration as a way towards the creation of new opportunities for the expansion of trade and investment. In this regard, Zimbabwe actively plays her part in the SADC region and directs her energies and efforts towards achieving tangible goals both politically and economically, jointly with other SADC Member States. To achieve these SADC goals, the country has crafted a number of policy initiatives to encourage and accelerate growth in the manufacturing and service sectors. Notable among these are the formulation of the National Export Strategy a plan on how Zimbabwe will access various export markets over a five-year period, the Small and Medium Enterprises (SME) Development Policy a policy that aims to integrate and accelerate growth of small and medium scale enterprises and the National Industrial Policy, a policy that aims at fostering the birth of new industries and growth of existing industries in the country.

The country has immense potential for growth given the huge natural resource base, a highly educated and skilled workforce and access to regional markets. Recently the country discovered huge deposits of platinum. Platinum mining and processing will be an addition to the already vibrant mining sector.

The country is endowed with a wide range of mineral resources including gold, nickel, diamonds, iron ore, copper and coal bed methane. Zimbabwe's coal bed methane is the largest known reserve in Sub-Saharan Africa. At current levels of extraction, the country can continue to mine coal for a period of up to 5,500 years. Zimbabwe welcomes Foreign Direct Investment (FDI) into the mining and other sectors.

The government has initiated the Public-Private Partnership Programme in order to promote economic growth and development. To support this position the government has put in place a number of incentives for investors and measures that create a conducive investment environment, which include among others tax breaks. These are mainly targeted at sectors with vast potential for growth. In addition, Zimbabwe has a strong manufacturing base and a diversified agricultural base. The country also boasts of exciting tourism resort centres.

Zimbabwe together with other countries in the SADC region have abundant raw materials. We should strive to process these resources into finished goods for the consumption of our people. In so doing we increase our export base as a region and beyond.

We have set the parameters that govern our regional trade through our Trade Protocol, but the challenge that most of us in the region face, is the need to make quality products that meet international standards. Our products face competition at home, in the regional market and the international markets. We can only beat this competition if we make quality products that are acceptable in all our markets.

Zimbabwe guarantees legal protection for all its investors through its constitution, which guarantees the right to private property and prohibits expropriation of private property without adequate compensation. As testimony the country has signed a number of investment protection agreements.

We fully realise that SADC is a building bloc to the realisation of the African Economic Community. The foundation that has been laid through the implementation of the Trade Protocol and indeed other protocols will assist in the process. We now need to ensure that we strengthen the process by refining implementation processes and procedures. Zimbabwe remains committed to the implementation of all the protocols under the SADC Treaty.

O.M. MPOFU (MP)
Minister of Industry and International Trade

Economic overview
Zimbabwe is well-endowed with natural resources including minerals, arable land and wildlife. The country has a relatively sophisticated and advanced financial system and the second largest stock exchange in Sub-Saharan Africa, after the Johannesburg Stock Exchange.

At present Zimbabwe is facing severe socio-economic difficulties. Hardships have manifested themselves in rising inflation, erosion of real incomes, critical foreign exchange shortages, decline in savings and investment, capacity under-utilisation, company closures and high unemployment. Rapid development of informal and parallel markets for both goods and foreign exchange are entrenching a growing shadow economy, with rising incidences of corruption in both private and public sectors.

Zimbabwe's economy is dependent on agricultural products including tobacco, cotton and sugarcane. The economy, which had contracted for the fifth successive year, improved from a decline of 10.3 percent in 2003 to a decline of 2.5 percent in 2004. In 2005, high international oil prices, coupled with the poor performance of the agricultural season, impacted negatively on the economy resulting in an anticipated decline of 3.5 percent in real GDP.

Inflation reached an all time peak of 622.8 percent in January 2004 but declined to 132 percent by the end of 2004. As a result of re-emergence of inflationary pressures, the annual rate of inflation rose again, to 411.3 percent in October 2005. The annual rate of inflation is, however, targeted to decline to around 80 percent by the end of 2006.

The government's announcement that public enterprises that had benefited from subsidies would now charge break-even prices, indicate that it is prepared to move away from populist policies. The new pricing policy is expected to benefit loss-making parastatals including the National Oil Company of Zimbabwe, Air Zimbabwe, National Railways of Zimbabwe and the Grain Marketing Board (GMB). GMB is expected to diversify its operations to achieve break-even levels.

Zimbabwe's total external debt disbursed and outstanding (including arrears) is estimated to have increased from US$3,857 million in 2003 to US$4,270 million by end December 2004, representing an increase of 11 percent. Of the country's total debt, 48 percent is owed to multilateral creditors, while bilateral and commercial creditors are owed 47 percent and 5 percent, respectively.

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