The Petronas Twin Towers in Kuala Lumpur. The World Bank says the Malaysian development model is suitable for Zimbabwe. (Saeed Khan, AFP)
Harare - Zimbabwe missed out on investments and developments which were targeted for emerging economies as it was experiencing an economic crisis, World Bank Country Economist Nadia Piffaretti has said.
Addressing the Mandel/GIBS Economic symposium, Piffaretti said Zimbabwe had missed out on most of the investment and development channelled towards emerging economies.
“There has been a global shift towards greater investment around the developing world and this has grown tremendously, but unfortunately it happened in the past 10 years when Zimbabwe was in crisis,” said Piffaretti.
She added Zimbabwe is not yet a globalised country because of the wasted decade, and needs to do further homework to ensure the country catches up.
Piffaretti said the mining sector can still attract foreign direct investment as gold, coal and chrome have high potential of absorbing new investment.
The World Bank has come up with two scenarios. According to the baseline scenario, maximum investment can go up to US$5bn by 2018 if there is no major change in how the sector is managed.
Most production volume would expand in gold and coal, resulting in the creation of only 5 000 new jobs.
In the active policy scenario, investment could reach $15bn, with 30 000 jobs created.
Piffaretti said the economic rebound the country witnessed since dollarisation is now moderating. “And this is normal. The economy finished rebounding and is now entering economic transformation.”
Piffaretti said World Bank studies have identified the drivers of economic growth for the country and using examples, concluded that Zimbabwe should follow the Malaysian or Indonesian model.
“We looked at China whose growth was driven by manufacturing, and Botswana whose growth is driven by diamonds, but found out Zimbabwe is more like Malaysia and Indonesia.”
Malaysia pursued mineral-driven manufacturing development, and Indonesia followed mineral-driven agriculture development.
The government has to increase incentives for investment in new projects and new discovery and transparency, she said. Piffaretti added that FDI and technology have to come to the mining sector.
She said the high current account deficit meant the economy is still vulnerable to shocks, and would carry its debt distress till around 2030.
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