Following its trip to Zimbabwe earlier this month, the International Monetary Fund has highlighted the local agriculture and mining sectors as keys to driving future economic growth.
The IMF discussed a range of economic concerns with national authorities and private sector representatives during the trip, from the country’s severe drought to high unemployment costs, to limited foreign inflows and large fiscal imbalances being financed by domestic borrowing.
“The recovery in agriculture and mining will drive growth this year,” the IMF said in the statement released after the trip.
As Agri Investor has highlighted in its ongoing coverage, a foundation of public support is crucial to attract private investment in developing regions. But the IMF statement suggests that the government support hasn’t yet adequately filled its role.
“Excessive government spending, if continued, could exacerbate the cash scarcity, further jeopardize the health of the external and financial sectors, and, ultimately, fuel inflation,” the IMF stated.
“Government interventions to support agriculture, while understandable, could be redesigned with the aim of maximizing the benefits on production while minimizing the risks to the public-sector balance sheet,” the statement went on. “The team recommends taking action to unleash the potential of the private sector and ensure that growth benefits the most vulnerable segments of the population.”
A report from the FAO released in February also noted that public policies — addressing everything from landscape preservation to water conservation, poverty, climate change, infrastructure and input subsidies — were needed to attract private investment.
“Although agricultural investments and technological innovations are boosting productivity, growth of yields has slowed to rates that are too low for comfort,” according to that report. “Food losses and waste claim a significant proportion of agricultural output, and reducing them would lessen the need for production increases.”
The global population is expected to grow to almost 10 billion by 2050, boosting agricultural demand by some 50 percent compared to 2013, according to that report. In addition, nearly 800 million people still suffer from hunger today, and more than two billion from micro-nutrient deficiencies or forms of over-nourishment.
Zimbabwe has a total land area of over 39 million hectares, 33.3 million of which are used for agricultural purposes, providing employment and income for 60-70 percent of the population, according to FAO documents.