By RUTH MASEKO
Africa-Press – Zimbabwe. ZIMBABWE’S quest to grow into a US$86 billion economy and attain upper-middle-income status by 2030 will require strategic interventions and a multifaceted policy approach, economists have said.
According to a World Bank classification, an upper-middle-income country has a gross national income per capita of between US$4 256 and US$13 205.
Upper-middle-income economies are typically marked by more diversified economic activity, with expanding industrial and service sectors and less dependence on a single commodity.
They also record higher levels of urbanisation, improved human development indicators — such as better access to education, healthcare and infrastructure — and deeper integration into global trade through increased exports of manufactured goods and services.
To give practical examples, countries like Brazil, China, Mexico and South Africa are upper middle-income nations.
With Zimbabwe’s informal sector now accounting for 76,1% of economic activity, according to official statistics, and the economy still heavily reliant on agriculture and mining, achieving upper-middle-income status remains a challenge, according to experts.
Economist Itai Zimunya told NewsDay Business on the sidelines of the recent Think Economic Competitive Agenda: Towards an US$86 Billion Economy Conference that reducing the cost of doing business was essential in stimulating economic growth and development.
“What we need to do as a country is to ease the cost of doing business in Zimbabwe. So, when we ease the cost of doing business, we make it easier for existing industries to grow, but we also make it easier for upcoming firms to start and grow,” he said.
With a significant portion of the population under 40, Zimunya highlighted the importance of creating opportunities for young entrepreneurs.
“The up-and-coming ones are so important in that, concerning the population of Zimbabwe, 67% are below the age of 40,” he said.
“So, we need the demographic dividend of youngsters from colleges and universities to start new businesses and grow them, but they can’t do that if the cost of starting a business is high.”
Zimunya also stressed the importance of government support in stimulating economic growth.
“The government itself must be serious. The government collects taxes from Zimbabweans. The government must spend its money in Zimbabwe,” he said.
“So, the government must be the biggest client of buying locally assembled vehicles, manufactured shoes for its soldiers and police officers, and manufactured garments so that its injection of money into the economy becomes a boon for the entire economy.”
To achieve sustainable growth, economists at the conference noted that Zimbabwe needed to look beyond its borders and tap into the African Continental Free Trade Area.
“There’s the African Continental Free Trade Area, so when we talk in terms of making the Zimbabwean incomes higher, we are not just looking at aggregate demand by Zimbabweans,” Zimunya said.
In addition, he also cited the need for the private sector to come up with new ideas to catalyse economic growth.
“The private sector, you know, economically speaking, is the engine of growth. But I think in Zimbabwe, the current private sector we have is not the engine of growth.
“We need new ideas, we need new capital, and we need new firms in Zimbabwe, but the new firms alone are not enough. We need the current firms to be restructured.”
He also raised the issue of headwinds faced by small and medium-sized enterprises in accessing finance, considering they are part of the 76,1% informal economy that largely remains untaxed, depriving the government of revenue.
“The banking sector is not doing what it is supposed to do. They are supposed to create credit by giving loans to startups and to the existing firms, but let me just go to the startups,” Zimunya said.
“How can a 19-year-old entrepreneur get money from a bank, which needs collateral, which needs a trade reference, when this is just a youngster who doesn’t have a bicycle, but has smart ideas?”
He advocated for a more innovative approach to capitalisation, where ideas are valued over collateral.
Economist Chenayimoyo Mutambasere said Zimbabwe should address its huge public debt of about US$23 billion.
“To reach a US$86 billion economy, Zimbabwe must urgently resolve its debt crisis, strengthen institutions and restore confidence through credible elections, respect for human rights, and genuine macroeconomic stability,” she said.
“Without tackling corruption and building public trust, the economy cannot grow at the scale the government is projecting.”
Corruption alone costs the economy about US$2 billion annually, according to the Zimbabwe Anti-Corruption Commission.
Legal think-tank Veritas, in 2022, reported that it was impossible to put a number on the extent of illicit financial flows out of the country.
However, estimates placed that figure at well over US$30 billion.
Treasury has in the past said the country needs at least US$40 billion in capital investment to reach an upper middle-income economy by 2030.
However, over the period, Zimbabwe’s foreign direct investment (FDI) inflows were US$280 million in 2019, and US$194 million (2020), according to the United Nations Conference on Trade and Development 2025 World Investment Report released in June.
This rose to US$250 million in 2021, US$395 million (2022), US$635 million (2023) and US$597 million (2024).
Mutambasere said sustainable growth required political will, consistent policy and an environment where investors trust the rule of law.
“Sustainable growth requires political will, consistent policy, and an environment where investors trust the rule of law. The real test is whether the government can create a stable, predictable operating climate,” she said.
Economist Vincent Musewe also provided a nuanced perspective on the recent signing of a US$1 billion investment commitment from Africa’s richest man, Aliko Dangote.
“We must not overstate the economic impact of US$1 billion. Zimbabwe needs about US$40 billion to deal with the infrastructure deficit,” he said.
“However, any journey starts with the first step, and this investment may attract others to come, depending on the treatment of investors, which we shall see.”
Source: NewsDay
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