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Dr Gift Mugano

Like all Zimbabweans, I am a patriotic Zimbabwean who wishes that his country is on the right growth trajectory. It is the aspiration of every citizen that there is inclusive growth – growth which mainstream every – the one which help every citizen of this country to have access to the basic needs – our constitutional rights! Against this background, today, I shall have brutal frankness. From now and onwards, we must not massage reality nor put lipstick on a frog to make it beautiful.

For starters, 2016, is one of the most difficult year in our history after 2008. We have been so unfortunate that the El Niño effects hit us so bad most probably worse than other regional countries. The United States Dollar has strengthened sustainably in recent years leaving Zimbabwe at mercy of vagaries of international trade.

The Chinese undertook a new growth path which has seen commodity prices especially base metals falling to the detriment of our mining sector. Internally, high cost drivers of utilities have remained a cancer thereby sparing no room for manoeuvre. The same applies to political environment has not done justice either.

The list of our sources economic problems is endless.

While it is not possible to address all our problems at once, we can sequence on a sector by sector basis.

Our first priority should be Agricultural sector.

It is an open secret that about 70percent of raw materials used in the manufacturing sector comes from agricultural sector. What is required here is to work very hard in raising productivity in this sector. In brief, we need to work on:

Providing at least 10percent of our national budget to the agricultural sector in line with the Comprehensive Africa Agricultural Development Programme (CAADP) and implementation of the CAADP framework;

Provision of incentives to companies to undertake contract farming – replicate the tobacco strategy to other crops;

Promulgating of a legal framework which requires companies to buy locally or promote business linkages – this move stop the madness of agricultural products being dumped in Mbare Musika from Kwazulu Natal and Polokwane!

Operationalisation of the commodity exchange – this will address the issues of post-harvest losses (through provision of markets) and collateral through the issuance of warehouse receipts;

Incentivising joint ventures and public private partners in agricultural sector;

Targeting input support through Agricultural Rural Development Authority (ARDA) and other farmers who have enough water with serious stringent rules;

Kick out unproductive farmers from the farms and replace them with serious farmers

This is not exhaustive but I am very confident that if we implement these measures we can restore food security.

With respect to manufacturing sector, if we sort out the rot in the agricultural sector we would have provided half solution to the manufacturing sector.

The moment the agricultural sector begin to breathe certainly the manufacturing sector will tick because there will be demand for the manufactured goods. Imagine how the chemical industries, implements manufacturers and other agro industries will respond when the agricultural sector rebound.

Above all the manufacturing sector is in dire need of fresh capital for retooling.

The sector failed to take advantage of the depreciated Rand due to lack of finance. The opportunity is still there! The million dollar question is how do we attract fresh capital?

One way is through attracting foreign direct investments (FDIs). Here we will be hamstring by the indigenisation law.

His Excellency President Mugabe clarified the law in recent weeks but this must be put into law. This requires the Ministry responsible for indigenisation to amend accordingly.

If we are going to attract FDIs into this economy, the indigenisation law must never be explained to anyone but one must just buy the statutory instrument or access the act on the Government website and comprehend it.

However, after all has been said and done, we cannot influence the speed to which FDIs will flow especially in the context of slowing global economy.

This requires us to work around establishing a bail package aimed at retooling.

If it means we have to talk to Africa Exim Bank to convert the $200 million into export facility as opposed to a reserve currency for the bond notes we must do it!

With regards to the mining sector, this is one of the critical sectors which brings in significant foreign exchange.

This sector is suffering from multiple taxes together with high electricity tariffs at a time where commodity prices are subdued. Actually, there are no signs that the commodities prices will recover soon. We need to address the multiplicity of taxes and electricity pricing if we are to save this sector.

Going forward, we need to lure new investors into this sector mainly focused on value addition and beneficiation if we are going to arrest commodity prices vulnerability.

For the existing mining entities, indigenisation credits must be given to firms which are investing in value addition.

From sectoral approach, I am confident that if we work very hard in addressing productivity challenges in agricultural sector, manufacturing and mining together with dealing with the microeconomics of competitiveness like cost drivers we will be able to withstand the forces of the appreciating United States dollar and the downside risk of Chinese new growth model.

After having said this, we would not have done justice to ourselves if we don’t address the political landscape.

Since the last election in 2013 we have never rested on political discourse. Under the normal circumstances, in the last decades, soon after we would go into production for a serious five years and then go into election fever after five year for say three months.

This time around we have literally wasted the lion share of our five year productive period in politics which is not good.

To be quite frank, this situation has created anxiety and a wait and see attitude both locally and externally.

I talked about the need to lure investors in order to revive the industry. There is no investor who will come to a country where there are negative perceptions we have actually created.

I have never seen a country where people in the same Government are neck to neck and still guarantee economic prosperity. This must stop.

From a trade facilitation point of view, when I talk to executives from industries I get worried when I hear that we have serious non trade barriers like licensing which are bent on discouraging exports.

For example:

Why the Minister of Industry of Commerce does has to issue permit for export of cement which is not in short supply?

Why the Minister of Agriculture has to issue export licence of agricultural commodities when we are facing liquidity challenges due to low exports?

For the record, Zimbabwe is one of the few countries in the world which is hamstringing its exports due to these non-trade barriers but at the same time is one of the most liberalised countries when it comes to imports. Quite fun! Isn’t?

We need to have national dialogue where were can have a point of convergence and that dialogue should come up with clear recommendations which are aimed to address these issues in the same format as the Rapid Results Approach.

Dr Mugano is an Economic Advisor, Author and Expert in Trade and Competitiveness. He is a Research Associate of Nelson Mandela Metropolitan University. Feedback: +263 772 541 209 or [email protected] .