EDITORIAL COMMENT: Govt must act, deliver more in 2016

Dr Mangudya

Dr Mangudya

As we close 2015 and the New Year beckons, Government has its work cut out. With all the hard work of 2015 behind us, 2016 should be the year of action and delivery. We are with the Reserve Bank of Zimbabwe governor Dr John Mangudya when he says that 2016 should be a transformative year.

But we worry that implementation has always been our bane and it’s time to exorcise this ghost as we go into 2016. The ground that we covered this year should not go to waste. There were a lot of milestones achieved this year towards creating an enabling environment through the rapid results approach.

Among the major steps Government took this year is restoration and strengthening of the RBZ as the lender of last resort. Government cleaned the central bank’s balance sheet through assuming the bank’s $1,4 billion debt. Through the Zimbabwe Debt Assumption Act, Government assumed the verifiable liabilities incurred by the central bank.

We note that Government amended the Banking Act to further tighten the domestic financial sector with a view to improving the corporate governance of banking institutions, make banking institutions more responsive to customers’ needs and to encourage the effective resolution of banker/customer disputes.

The banking sector is a critical factor in facilitating economic transactions and strengthening this sector is paramount.

In the new year, we should build upon the stability that has been created in the financial services sector.

Tied to this, is the strengthening of financial policies which include the Diaspora policy to ensure that we account for all Diaspora earnings through the formal banking system.

We should also find ways to ensure that the SMEs sector is formalised. We understand from the central bank that billions are circulating outside the formal banking structure. Government should devise practical ways to harness this money.

We signed mega deals with the world’s second largest economy, China this year. We take heart that some of the deals have already been implemented with the Export-Import Bank of China providing concessionary funding for the engineering, procurement and construction (EPC) of the Hwange Power Station Expansion Project (Hwange 7 and 8) and the TelOne Backbone Network and Broadband Access Project (TelOne Project). Work has already commenced at Kariba Power Station.

However, some of the deals are still at the embryonic stage. We need these on board if 2016 is to be a transformative year. Zimbabwe made huge strides in re-engaging multilateral and bilateral creditors last year and we must build on this.

Our attendance at the International Monetary Fund and World Bank annual meetings in Lima, Peru is a major milestone we should milk.

Zimbabwe presented a comprehensive arrears clearance strategy which was endorsed by our creditors at the meeting convened by the IMF, WB and the African Development Bank.

The strategy to clear arrears to the three IFIs involves a combination of using the country’s own resources, arrangement of bridge finance with regional and international banks and the usage of bilateral loan facilities.

This culminated in the development of a new Comprehensive Country Financing Programme supported by the AfDB, the IMF and the WB. The financing programme is aimed at promoting growth and debt sustainability.

The strategy paves way for the engagement of the European Investment Bank, the Paris Club and non-Paris Club bilateral creditors for debt resolution.

This year we should stick to our agreed timeline to pay up and leave the ball in the IFIs court. Doing that will help clean our financial and economic standing in the eyes of the world and this is critical.

The development of the National Competitiveness Report is quite significant. The NCR and RRA are instruments which Government established to spearhead reforms. The cost of doing business and the general business environment will improve in 2016 and the trickle-down effect will certainly impact on the small and medium businesses. This should also help in addressing the country’s competitiveness and attract foreign direct investments.

However, FDIs will not come on a silver platter even if we put all the necessary measures in place. Experience from Georgia shows that after developing an NCR and implementing the related policy reforms, which ensued there was no change in FDIs after implementing all the reforms.

What needs to be done is to have a communication and campaigning strategy which is aimed at creating awareness across the globe of new developments. Even locally, policy reforms remain useless unless the beneficiaries are informed of these changes. We are aware that Government is finalising the communication and engagement strategy.

This is good, but the devil lies in implementation.

Work in the development of new power stations, which include solar energy is worth noting as it has laid the foundation for economic growth.

There are also interesting measures which have been pronounced in the National Budget aimed at addressing national productivity like agro-business linkages and business linkages. We must pursue these measures in 2016 so that we can localise the money as opposed to the current situation where we have been turned into till machines by foreign owned retailers.

We have many other important policy measures that require finalisation.

The new year should see action and delivery.

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