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DR Gift Mugano
Government in October 2013 unveiled a five year economic blue print known as the Zimbabwe Agenda for Sustainable Socio-Economic Transformation (Zim-Asset).

Zim-Asset is a cluster based plan, reflecting the strong need to fully exploit the internal relationships and linkages that exist between the various facets of the economy. These clusters are as follows:

Food Security and Nutrition;

Social Services and Poverty Eradication;

Infrastructure and Utilities; and

Value Addition and Beneficiation.

During the plan period, the economy is projected to grow by an average of 7,3 percent with an upward growth trajectory to 9,9 percent by 2018. The projections were based on a series of positive assumptions such as improved liquidity, revenue collection and access to credit by key sectors of the economy such as agriculture and mining. There was distinct hope for more foreign direct investment flowing into the country.

Increased investment in infrastructure such as energy, roads, rail, aviation, telecommunication, water and sanitation was supposed to give the private sector a boost. Government involvement through Public Private Partnerships and the establishment of Special Economic Zones was meant to further stimulate business activities.

More than a year later, however, the outlook of Zimbabwe’s economy looks very different indeed. Commodity prices, mostly agriculture and mineral prices, edged lower in the recent months and are projected to continue on the downward trend in 2015. This will certainly pose potential risks for our export earnings in commodities and minerals such as platinum and gold.

Weak domestic demand, tight liquidity conditions and the appreciation of the US dollar against the South African rand, the currency of our main trading partner, further seriously threaten the competitiveness of our economy and have already led to incessant company closures.

As a result, the country achieved growth rate of 3,1 percent in 2014 and had to lower this year’s growth forecast to 3,2 percent in 2015. Both figures are well below the planned annual growth rate of 7,3 percent.

Unfortunately, these indicators shows that under the current circumstance major milestones set in Zim- Asset blueprint might not be achieved. Assumptions upon which our targets in the Zim-Asset were built are also in tatters.

Five areas are especially essential when driving Zim-Asset towards the set targets:

1. Decrease in liquidity and access to credit across all sectors

2. Decrease in revenue collection from key sectors of the economy such as mining declined due to depressed world market prices.

3. Decrease in Foreign Direct Investment

4. Slower implementation of value addition policies and strategies;

5. Electricity and water supply is worsening

Especially, in those five areas we need to come together and find solutions. Neither Government, nor civil society or the private sector alone will be able to devise clever strategies to combat global market forces and stimulate domestic demand for our goods and services.

Our dialogue should be centred on:

Improving liquidity and fiscal space.

In this thrust, we need to collectively unpack ways of dealing with improving the generation of cash locally in the face of reduced export earnings and ever increasing import bill due to the appreciation of the US dollar.

Some of the measures have been enunciated in the recent monetary policy statement, for example business linkages or demands to implement local content policies for foreign firms.

Dialogue will help to find solutions that are mutually beneficial. It will find ways to translate this policy advice into action by forcing relevant stakeholders to make decisions and see them implemented. Certainly, business linkages will save the country from importing unnecessary things like toothpicks and agricultural produce and help generate employment opportunities for our youth.

Attracting Foreign Direct Investment.

Zimbabwe has continued to receive a paltry share of the FDIs coming to the continent. As shown by recent statistics, the numbers have continued to fall from 20 percent of GDP in 1996 to 1,1 percent of GDP in 2014. Through dialogue which is supported by evidence we can unpack some of the factors constraining FDIs. This will include many policy issues which are a de facto barrier for market entry. Dialogue might also contribute to improve Zimbabwe’s image on the global stage by establishing a counter-narrative.

Expediting value addition policies and improving infrastructure

Historically, Zimbabwe has developed services throughout the value chains of certain industries such as cotton or wood making. Government policies can help develop business linkages and value chains further.

Private sector input into where this is most helpful and how policies are best implemented can stimulate economic growth. Well managed public-private partnership models in areas such as water supply and electricity can also boost Zimbabwe’s capacity and remove some operational impediments for businesses.

The Government’s initiative to set an agenda for the country through Zim-Asset is a welcome step into the right direction. Zim-Asset provides opportunities for all of us to find agenda items through the established clusters to help our country grow. Making decisions collectively and inclusively will help us to deal with exogenous and internal shocks like drought and help pave the way to a more robust economy.

Instead of positive spirits, I have experienced much dismay since the launch of Zim-Asset.

Most stakeholders squarely put the expected funding of the blueprint amounting to $27 billion squarely on the shoulders of Government.

The Government is not the sole shareholder of the economy. Rather, the Government’s role is purely that of providing an enabling regulatory environment not to be an active player otherwise we will back to the 18th century of the mercantilism.

In most cases we have relegated our efforts on Zim-Asset through the blame game, complaining on the slow pace of implementation or investing efforts in the ‘I don’t care attitude’. The prevailing macroeconomic and global environment calls for robust public private dialogue which is informed by evidence.

Public private dialogue if supported by evidence and inclusive will help the nation to build consensus, easy policy implementation and improve investment climate.

This is the very reason why Government in 1998 established the National Economic Consultative Forum which is a smart partnership between Government and private sector aimed at promoting dialogue. And, true to its commitment, Government continued to support NECF which has taken a coordination role in the dialogue around Zim-Asset.

Based on my recent experiences in the dialogues, it is Government or NECF who initiate these dialogues with minimum effort from private sector. In some cases, some private players are shy to participate in these forums save for the recently held fuel pricing dialogue. The challenges we are facing today can only be solved together.

Private sector must therefore also initiate dialogue with Government.

However, dialogue is not only there to discuss challenges, furthermore, it can be used to unpack the quick wins which were realised to date.

Some significant achievements have been made recently especially in the energy and mining sectors after signing mega deals with China and Russia, respectively.

We also witnessed renewed investment in road construction and repairs, especially the highways, which will foster trade and movement of goods and services. We need to celebrate these achievements and build on that going forward.

• Dr Mugano is an Expert of Trade and Competitiveness and Research Associate at Nelson Mandela Metropolitan University (SA). Feedback: Email: [email protected] <mailto:[email protected]>, cell: +263 772 541 209.