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Dr Gift Mugano
Our economy showcases a number of mysteries which puzzles onlookers. From 1998, the country went through various turbulences which saw it being hit by various ‘economic cyclones’ which range from illegal sanctions, corruption and underemployment of resources such as land, human and financial resources in some cases.

Our economy is resilient notwithstanding the fact that it crushed towards the end of 2008 and within a month or so after dollarisation normalcy returned. Isn’t it a puzzle that an economy that could have stayed stuck in the doldrums came back to life and began to witness tremendous growth which averaged 10,7 percent per year from 2009 to 2012?

We all believe that agriculture is the backbone of this economy. I don’t want to create controversy here. I would rather want the readers to deduct on themselves the sector which is really the backbone of the economy.

Based on ZIMSTATS figures, the services sector constitutes around 60 percent of the Zimbabwean economy. The manufacturing sector currently contributes about 13 percent of the entire economy. Mining and agriculture contribute about 6 percent and 12 percent, respectively.

The question for the readers is, which sector is the backbone, that is, one which contributes 60 percent or the one which contributes 12 percent?

Services, in terms of contributing to the national output is the backbone of our economy not agriculture!

Even if we link agriculture and manufacturing sector, in as much as well all agree that agriculture contributes 70 percent, the combined effect of agriculture and manufacturing sector won’t exceed 25 percent of the entire economy if we take into account the factor that not all manufacturing sector is agro related.

Agriculture is key from a food security perspective. This is debatable but numbers don’t lie.

The puzzle now comes from the following questions:

• How do you explain a situation where all policymakers put all their efforts on agriculture and one rarely sees the same energy applied to the services sector? Under the normal circumstances, I would have expected more effort applied to the services sector without of course neglecting other sectors.
• How do you explain our case where our exports are largely minerals, tobacco and cotton (constituting 85 percent of total exports) and very insignificant contribution from services which is the main economy? We could still have exported the same quantum of exports from minerals, tobacco and cotton in absolute value but the share could have been insignificant in relative terms if we unleash the potential from our services.

Because of these anomalies we are found wanting when it comes to policy. I have not seen a clear policy save for the diaspora policy aimed at triggering exports from the services sector.

Even the diaspora policy is merely focusing on more directorate rather than a clear strategy to exports our human capital.

We are rather focusing on who is where without even going further in providing investment opportunities for the diaspora to send money back home.

Other countries such as Ethiopia and Nigeria have clear policies aimed at using their nationals to contribute to national development. In Ethiopia, they actually have diaspora day where they showcase the work which the Ethiopians outside the country are doing.

This brings unity of purpose and national cohesion. The Ethiopian diaspora, through a diaspora bond, they are building the biggest power generation plant in Africa.

Let us look at education. We all agree that Zimbabwe’s education system is respected worldwide more than any other country in Africa.

Isn’t it a mystery that Zimbabwe notwithstanding its prowess in education has mercilessly watched from the terraces when other regional countries like South Africa in particular as aggressively using the education sector (service sector) to drive its exports.

Today we are all flocking to South Africa. One thing for sure I would like to salute the South Africans is the investment we have put into the infrastructure at their universities – it is world class!

This came into being through a deliberate policy and associated programme attached to it.

If we put our hands together we can do it. We can raise the level of infrastructure in our universities. There are great opportunities potential collaborations between universities and private sector under public private partnerships (PPPs).

Today, we see banks are investing monies into houses but seldom in putting money into university infrastructures like student residence, libraries and lecture theatres which can all get financed via a revenue bond. It seems that our systems are not working.

From a productive perspective, from a sequencing point of view, we are directing our funding into houses which are equally important but not university infrastructure which is very important and can be actually more viable for banks than houses.

If I was a prophet I would prophesise that we are underproductive because we are investing into sleeping. From a well-educated nation, here we are found wanting.

The third paradox relates to our inertia in securitising land. I am not a politician hence readers should forgive my ignorance on this matter.

My economic persuasion is that we need to collateralise our land so that we can use it to unlock funding. At the moment our land is dead capital.

I found it amiss that Government is okay with provision of title deeds to land meant for housing so that we can get comfort in sleeping.

The same Government is reluctant to give title deeds to farmers who need the same title deeds to unlock funding for production. Isn’t it a paradox?

The irony is that the same Government acknowledges that our fundamental problem is low production and underemployment of resources.

My political persuasion on why it shouldn’t be difficult for politicians in particular to provide permanent title deeds for land rest on my conviction that it secures the politicians themselves from possible loss of the land when they are found offside.

Last year, we saw one politician destroying fruit trees in one of our 10 provinces after hearing a rumour that his farm was going to be repossessed.

This is a tragedy. It is anti-developmental. This is the same reason why banks are not prepared to sufficiently fund agriculture because risks are inherent.

I hope that one day politicians will see this argument useful. I would for once want to see politicians helping themselves in securing their heritage.

What I know is that the law will not be applied selectively. It therefore means if the land is now collateralised, my grandmother’s land in Chimanimani will also be collateralised.

The fourth paradox regards how foreign direct investment (FDI) is utilised in Zimbabwe.

Economic theory provides for advantages and disadvantages of FDIs. We all blindly think that FDIs will bring benefits related to employment creation and generation of exports among others.

The disadvantages of FDIs comes when the FDIs becomes exploitative in nature.

In Zimbabwe, my observation is that FDIs are largely exploitative in nature. Hence, the reason why we cannot find a good explanation why after getting a record FDI of $1,2 billion in 2015 we didn’t hear of any reports of massive job creation.

To spice it, the 2017 national budget shows that major sources of liquidity in Zimbabwe are exports and diaspora remittances with a share of 60 percent and 30 percent, respectively. The 10 percent balance is shared between FDI and aid.

How do you expect FDI to contribute such paltry share when we received $1,2 billion in 2015 against remittances which received around $900 million but still contribute 30 percent of liquidity? Isn’t this a paradox?

I am sure monetary authorities have a better explanation on this but as an outsider, my reading is that this FDI is largely finding itself into the country via materials like equipment and machinery.

The tragedy is that we will have to use the locally generated cash to finance the same FDIs which didn’t bring cash in the first place. This is the same reason why we are hard hit by liquidity challenges. We need to address this anomaly.

Together we make Zimbabwe great!

•  Dr Mugano is an Author and Expert in Trade and Competitiveness. He is a Research Associate at Nelson Mandela Metropolitan University and a Senior Lecturer at the Zimbabwe Ezekiel Guti University. Feedback: Email: [email protected], Cell: +263 772 541 209.