HARARE, March 1 (Xinhua) -- Despite decades of low economic growth, Zimbabwe still boasts of several highly competitive value chains that could help to position the private sector as a major driver of economic growth in the country, the World Bank said Friday.
With limited fiscal space, lack of foreign direct investment, and a pressing challenge to reduce growing extreme poverty, Zimbabwe needs to find new ways to harness its comparative advantages and to capitalize on existing and emerging opportunities for the private sector to drive economic growth in the country, the World Bank said in its "Country Private Sector Diagnostic" report on Zimbabwe released Friday.
"Notably, the report finds Zimbabwe to be highly competitive in several value chains in agriculture and agribusiness industries, including sugar, cotton, horticulture, as well as meat and dairy. Furthermore, tourism and mining of energy transition minerals - including ample reserves of lithium - hold significant potential in the short term," said the report.
It noted that the main constraint to unlocking the private sector potential is chronic macroeconomic instability, historically caused by loose monetary and fiscal policy, foreign exchange rationing, and structural challenges.
Macroeconomic imbalances and distortions, including strict foreign currency surrender requirements and uncontrolled inflation, constrain private sector development in Zimbabwe, it said.
While the country was one of the fastest growing economies in the Southern African Development Community in 2022 and 2023, with economic growth of 6.5 percent in 2022 and 4.5 percent in 2023, sustaining this growth will require Zimbabwe to tackle its macroeconomic and structural challenges, the World Bank said.
The Bank observed that the new Structured Dialogue Platform between the government and development partners outlines an important set of reforms and pathways to address Zimbabwe's pressing external debt arrears problems to unlock access to affordable external credit lines and stimulate much-needed public and private sector investment to boost economic growth.
"However, these efforts are taking place against the backdrop of a complicated global environment characterized by depressed global growth, volatile global commodity prices, and the predicted erratic and below-average rainfall caused by the El Nino weather pattern," it said. ■
