HARARE – Zimbabwe is an agro-based economy. At its peak, the Agriculture sector contributed to over 30% of GDP. This was the situation during our glory days when the country was dubbed the Bread basket of Southern Africa.
Unfortunately, the southern African nation has been prone to droughts in the past few years. Albeit reeling from economic effects of the coronavirus, the country’s farmers are also increasingly falling prey to natural disasters, droughts and torrential rain largely due to climate change.
The southern African nation’s economy contracted cumulatively by about 11% during 2019-20 owing to the combined effects of the pandemic, cyclone Idai, a protracted drought, and weakened policy buffers, according to the International Monetary Fund (IMF).
This farming season, the country received moderate to heavy rainfall in January after a very poor start to the season. Rainfall continues to be below-average and these conditions will likely lead to below-average production.
Substantial year-on-year cereal production declines are forecast in Malawi, Zambia and Zimbabwe, where harvests are likely to fall to below-average to average levels after the bumper outputs obtained in 2021, according to the Food Agriculture Organisation.
Thanks to firm mineral prices (nickel, gold, and platinum). This will play a pivotal role in achieving the economic growth which is expected in 2022 of 5.5%.
A record-breaking rally in nickel prices that led the London Metal Exchange to halt trading recently which saw prices top $100,000 a tonne. On the other hand, gold prices are expected to trade higher this week if the Russia-Ukraine crisis escalates further. Prices of gold could hit as much as US$2,000 an ounce if the conflict in Europe expands. But, there is also a possibility of prices immediately pulling back to around US$1,900 an ounce if tensions ease.
Gold is Zimbabwe’s largest means of foreign income, vital for a country in the middle of fighting the effects of Covid-19 pandemic to the economy. Traditionally it has been a safe haven investment in difficult times.
Zimbabwe is targeting to be producing 100 tonnes of gold per year by 2023, which is part of a drive to achieve export earnings of US$12 billion by the mining sector by that time. Of the US$12 billion, gold, platinum diamonds will contribute US$4 billion, US$3 billion and US$1 billion respectively. Chrome, iron ore and carbon steel will contribute US$$1 billion while coal and hydrocarbons will contribute the same. Lithium at US$500 000 while other minerals will constitute US$1.5 billion.
The resource prospects of a 12 billion mining industry by 2023 are abundant, what is left now is the action. There needs to be a drive for value addition in all minerals so that the country creates jobs locally and increase the value of exports. There should be fair rewarding system especially at Fidelity which is the sole legal buyer and exporter of gold in the country. Opening up to more private players to the gold buying and processing can lead to reduced smuggling as well as reduce black market trades.
