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The MDC’s $100 billion economy pledge just does not add up

Economists use “the rule of 70” to estimate the number of years it takes for any variable to double.

The rule is that for an economy to double in size, it needs to grow by 10 percent every year for seven years.

So, growing Zimbabwe’s $14 billion economy to $100 billion within five years is by this measure a mathematical impossibility.

It can’t.

If Mashakada is to be believed, the economy will grow over 600 percent in just over three months.

Zimbabwe would need annual growth of 48 percent to reach $100 billion in five years, and some 22 percent per year to get to that size in a decade.

For perspective; the fastest growing economy in Africa, Ethiopia, averaged growth rates of over 10 percent in the decade to 2015, growing its economy from $12 billion to over $61 billion over the period.

Ethiopia – population 100 million – is forecast to grow 8.3 percent in 2017, according to World Bank.

To provide further context, African economic growth is projected at 2.6 percent in 2017, with aggregate growth rising to 3.2 percent in 2018 and 3.5 percent in 2019.

The average economic growth rate globally is about 2.7 percent at the moment.

Hot growth giants such as India and China are growing at around seven percent per year.

And all the while, according to MDC-T, Zimbabwe will be motoring ahead, all on its own, with close to 50 percent annual growth?

It is a moot point to even debate how MDC-T plans to achieve this miracle growth.

However, it is important to examine what we know so far of their plans.

According to Mashakada, the MDC-T will achieve this mainly through foreign investment, public sector reform, and infrastructure.

The party is right that economic growth will need massive infrastructure investment.

Currently, only four percent of the budget is going into infrastructure.

So, how much does Zimbabwe need for infrastructure?

According to AfDB data, Zimbabwe needs $2 billion per year to fix its infrastructure.

A total of $14 billion is needed.

In 2013, a senior World Bank official said Zimbabwe needed over $33 billion for infrastructure over 20 years.

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