Zimbabwe dragging the region down, says report

Southern African's economic performance is being dragged down by Zimbabwe's negative growth rate, the UN Economic Commission for Africa (ECA) said in a report this week. "Despite the projected increase in growth in Angola (8.9 percent), Mozambique (8 percent), Botswana (5.5 percent) and Mauritius (5.4 percent), Southern Africa is expected to lag behind the other subregions, with real GDP growth of 3.6 percent in 2004, held back by contraction in Zimbabwe (-5.5 percent)," the ECA said. However, Neuma Grobbelaar, head of the Business in Africa project at the South African Institute of International Affairs, said it "was dangerous" to hold a single country responsible for the entire region's performance. She cited a recent business survey conducted for the Association of Southern African Development Community's Chamber of Commerce and Industry, which listed other reasons hindering growth, including volatility of exchange rates across the region; lack of infrastructure; crime and corruption; security of investment; a rigid regulatory set-up and the need for an integrated tax regime. Drought in Malawi, Lesotho and Swaziland had also played a role in slowing growth, Grobbelaar noted. "We are talking about very small economies with tremendous pressure on social spending - they have to prioritise between having to spend on HIV/AIDS or developing their road network, port facilities to attract investment, [etc] - which will help their economy grow and create jobs," she explained. Zimbabwe, once the second largest economy in the region, has become the fastest shrinking on the continent. The International Monetary Fund's World Economic Outlook, also released this week, noted that Zimbabwe's economy was in "sharp decline, with the disorderly land reform reducing agricultural production and concerns about governance discouraging investment, promoting capital flight and emigration". However, the IMF's projection for Zimbabwe indicated a positive growth rate of 1.8 percent in 2005. The IMF report also forecast rocketing growth rates for Angola - 11.2 percent in 2004 - and an estimated 15.5 percent in 2005, "mainly reflecting increasing oil output". Growth in South Africa was expected to rise to 2.5 percent in 2004, reaching a little over three percent in 2005. The IMF called on South Africa to remove "rigidities in the labour market and provide skills training for unemployed workers" to reduce its high official unemployment rate of 28 percent, which analysts estimate is actually 40 percent. Remarking on the slow growth rate in South Africa, Grobbelaar said it had "done everything right, but now it has to reconsider the interest rate and the strengthening of the rand to create an environment conducive for the creation of jobs". The IMF report noted other positive growth areas in Southern Africa. It said Mauritius' "superior economic performance and financial stability have been underpinned by a tradition of good governance, including respect for the law and property rights, a culture of transparency and participatory politics, and an implicit social contract among government, firms and labour." Strong legal rights had also fostered development in Namibia, while Botswana's transparent institutional arrangements and a rule-based approach to fiscal policy had helped its economy to grow, the IMF said.