Dr Gift Mugano
President Mugabe, in August 2015, gave a State Of the Nation Address (SONA) in which he laid the ten pointers namely:
- Revitalising agriculture and the agro-processing value chain;
- Advancing beneficiation and/or value addition of agricultural and mineral resource endowment;
- Supporting infrastructure development in key sectors like energy, water, transport and Information Communication Technologies (ICTs);
- Unlocking potential of Small to Medium Enterprises (SMEs);
- Encouraging private sector investment;
- Restoration and building of confidence and stability in the financial services sector;
- Promoting joint ventures and public private partnerships (PPPs) to boost the role and performance of state owned companies;
- Modernising labour laws;
- Pursuing an anti corruption thrust; and
- Implementation of special economic zones to provide impetus for foreign direct investment.
The ten-point plan aimed to buttress 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 and was expected to continue on an upward growth trajectory to 9,9 percent by 2018. This was based on the following assumptions:
- Improved liquidity and access to credit by key sectors of the economy such as agriculture;
- Establishment of a Sovereign Wealth Fund;
- Improved revenue collection from key sectors of the economy such as mining;
- Increased investment in infrastructure such as energy and power development, roads, rail, aviation, telecommunication, water and sanitation, through acceleration in the implementation of Public Private Partnerships (PPPs) and other private sector driven initiatives;
- Increased Foreign Direct Investment (FDI);
- Establishment of Special Economic Zones;
- Continued use of the multi-currency system;
- Effective implementation of value addition policies and strategies;
- Improved electricity and water supply.
There is a casual link between the ten-point plan and the Zim-Asset assumptions. If the ten-point plan is fully implemented it will help in the realisation of the assumptions under Zim-Asset. Assumptions, by definition, are necessary condition or requirements for the attainment of a particular goal. It therefore means that if the assumptions are not realised it becomes difficult to achieve Zim-Asset goals.
While progress has been made in assumption like accelerated implementation of PPPs and establishment of special economic zones, key assumptions like the need for improvement of liquidity, increase in foreign direct investment, improvement in revenue collection from the mining sector and effective implementation of value addition policies and strategies have not been realised.
As a result, we have failed to achieve the annual growth rate of 7,3 percent as enunciated in the Zim-Asset. My reading is that the ten-point plan is clearly a reform based agenda whose thrust is aimed at creating an enabling business environment for production enhancement, attracting foreign direct investment and removing impediments to business growth.
From the ten-point plan, without repeating the whole script, the thrust towards dealing with corruption, building confidence in the financial services sector, implementation of special economic zones and encouraging private sector investments are key in building the necessary impetus for economic growth.
On corruption, if we are to be honest with ourselves, this scourge was not dealt with expeditiously since August 2015. Our Auditor General has produced volumes of reports on the same with no action. Interestingly, the Zimbabwe Anti-Corruption Commission has been very vocal on the same but sadly the public didn’t see action taken against the culprits. As a matter of fact, it has become a norm. To spice it, we actually rank badly global when it comes to corruption.
The problem with corruption is that it doesn’t only cost the country through depletion of resources which were meant for production but also repel investors. Corruption index is one such indicator that investors look at before they make decision to come and invest in a particular country.
As we go forward, our moral suasion must help us to do the right thing. We must deal with corruption decisively.
Here we don’t need to invent anything. All the apparatus, institutionally, that is, judiciary system, police and ZACC, to deal with corruption are solid on the ground what is lacking is political will. Hence, from a policy perspective, it must be Government thrust to kill corruption once and for all.
Building confidence in the financial services sector, our savings rate is -11 percent. We have negative savings largely as a result of the crowding of the financial services sector by Government via the treasury bills which were issued to the tune of $4,4 billion to finance Government debt or expenditures. This level of debt is on its own a serious threat on financial sector stability. And, as such, economic agents’ confidence with the financial sector will be dampened. It is therefore important that Government radically cut its expenditure particularly the wage bill.
Other factors which are real impediments to financial sector stability are liquidity crunch which has seen depositors failing to withdraw their money, policy consistency when it comes to the monetary policy pronouncement.
The headache which came with the bond note must not be repeated. What must happen now is that as the printing of the bond note is coming to an end, since we are at $190 million (out of $200 million), we must not hear about bond note again. The bond note must have a natural death through natural attrition.
In order to attract deposits, the banks must also deal with their own specific aspects which fall into their constituency like bank charges, interests and deepening financial services. There is no way we can have financial services stability when money stays under the pillow.
With respect to special economic zones implementation and encouraging private sector investments, going forward, Government must work on the development of the necessary infrastructure in areas demarcated for special economic zones. These infrastructures should include roads, sewer, electricity and factor shells. This is key as it is best practice worldwide.
At the back of our mind we must know that private sector investments and investments into special economic zones can only happen if and only if our investment climate is top notch. This still take us back to the need to stop corruption, remove the impediments to business growth by undertaking doing business reforms. On doing business reforms we have done well so far but we must move with great speed to have them legislated and implemented.
The game going forward should be centred on working hard to bring foreign direct investments and export drive. Unfortunately, both export and investment Granger — cause each other — this is clearly a hen and egg debate!
I am convinced that we work on these two fronts, that is, trade and investments, this country will take off. Our business should therefore work around the clock to remove all the impediments on foreign direct investments. This includes dealing on the matters I have raised which were spelt out on the ten-point plan and other matters. If it means that we have to bite the bullet on indigenisation we must do it!
Together we make Zimbabwe great!
- Dr Mugano is an Author and Expert in Trade, Investments and Development. 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.