Mangudya says Zimbabwe must stabilise the economy one sector at a time

Central bank governor John Mangudya says the country must focus on stabilising the economy, one sector at a time, with the resources industry the initial target.

“As the Reserve Bank we have started with gold and we are capacitating Fidelity Printers so that it can buy more gold from large mining companies as well as from artisanal miners,” Mangudya told delegates attending an Africa Leadership Convention on Offshore Investment at a local hotel.

The RBZ reopened Fidelity Printers and Refiners in December 2013 following years of redundancy resulting from undercapitalisation and the liberalisation of gold exports in 2009.

Last year, government revised gold royalties for small scale producers from seven to five percent to mitigate against falling commodity prices.

Mangudya said Zimbabwe last year produced 14 tonnes of gold but noted that Tanzania which has less reserves, produces an average of 40 tonnes of bullion annually.

“We have the second largest platinum reserves in Africa and our diamonds constitute more than 25 percent of the world’s total. Zimbabwe’s coal is among the best in the world,” he said, adding that it did not have the capacity to add value to the raw materials.

However, despite having vast natural resources, the southern African country has failed to leverage on them as evidenced by high poverty levels, frequent power cuts, company closures and declining social service delivery.

A FinScope consumer survey for 2014, conducted by the Zimbabwe National Statistics Agency (ZIMSTAT) and Research Continental-Fonkom, found that 76 percent of adult Zimbabweans earn less than $200 month.

Zimbabwe’s economy, which gained traction during the Inclusive Government era between 2009 and 2013 growing by an average of seven percent annually, has been slowing down since the July 2013 elections that extended President Robert Mugabe’s rule.

Its current account deficit constitutes about 24 percent of GDP compared to under nine percent among regional peers.

Mangudya said there was need to right size the economy through a step by step approach and refrain from exerting too much pressure.

Last month, he proposed a wage freeze to avoid further straining the economy and stifle its recovery.- The Source

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