EDITORIAL COMMENT : Economic growth comes from all, benefits all

03 Aug, 2021 - 00:08 0 Views
EDITORIAL COMMENT : Economic growth comes from all, benefits all

The Herald

The dramatic 34 percent jump in the value of agricultural production now expected this year is a major factor leading to the upwards revision of national economic growth to 7,8 percent and the continued improvement in agriculture is no doubt a major factor in the 5,4 percent initial prediction for next year.

We need to remember when the Budget was drawn up in November last year, that the 7,4 percent prediction for growth did not take into account two very bad waves of Covid-19 that did cause some economic downturn, including the continuing hammering of the tourism sector. So agriculture’s growth not only compensated for the hit other sectors had to take, but pushed the whole economy forward.

One interesting inference from the original prediction of 11 percent growth for agriculture this year, a prediction made before the rains started, is that the Government in general, and the Ministry of Finance and Economic Development in particular, does not believe in wishful thinking or hoping that everything will be all right on the night. When the 11 percent growth in farm output was predicted there were already signals from the meteorological experts that the season in Southern Africa would be rather good.

That does not appear to have influenced the prediction, the economists wanting to see the rains and the harvest before they started doing their sums.

The original prediction appears to have been based on more solid work that had already been done, and paid for. Farmers, especially small-scale farmers, had been taught new techniques of conservation farming, pretty well guaranteeing they would do a bit better even if the rains were not very wonderful.

The Government itself, through its own input schemes and guarantees for commercial banking financing of inputs, had ensured two other critical factors: farmers would get their inputs on time before the season started and only genuine farmers, those who had land that they were using and had already prepared, would get these inputs.

The hard slog put in by the Ministry of Lands, Agriculture, Fisheries, Water and Rural Resettlement to identify and train these genuine farmers, added to the Finance Ministry ordering the inputs in time, added to the industrial and agro-industrial sectors fulfilling the orders in time allowed most farmers to start planting the day they got the go-ahead after enough rain had fallen to germinate the seed.

Last year all the bits worked, singularly and collectively. Then over a million farming families put in some extraordinary hard work. Even with a so-so season when it came to rain would probably have seen more than 11 percent growth in output; the decent rains were a bonus that pushed the growth rate higher.

That large jump in agricultural production was very widely spread. Most of the million plus families who were assisted, in a very businesslike way with the potential cheats excluded, now have money in their pockets or will soon have money in their pockets as they deliver the crops they are not retaining for family and farm consumption.

That in turn must be one of the factors that is driving the upgraded prediction of 7 percent industrial growth. When the largest single Zimbabwean market, the small-scale farmers, can afford to buy things obviously other people will be working hard to make those things. And that feeds industrial growth. Industry, in any case, also had its base prepared last year for growth. A couple of months after the middle of the year, industrialists finally had a stable exchange rate and an adequate inflow of foreign currency.

The sudden crash in monthly inflation rates seen in the last four months of the year, largely as a result of the stability in import prices produced by the auction system, obviously helped. The upshot was that they were able to get organised and by the start of this year stop thinking about “recovery” and start thinking about “growth”.

We have already seen this in the weekly currency auctions. The sums bid to pay for plant and machinery are growing significantly, implying that industrialists are not just replacing worn-out or obsolete equipment, but are extending their production lines.

The better prices miners are getting, and we are still in the early days of mining expansion because it takes quite a bit of time to open a new mine or even sink new shafts, is helping to fuel those auctions.

Mining is another sector where “recovery” is no longer the watchword, and mining companies are thinking about raising output, not restoring output.

It is worth noting that the economy is growing because all these sectors are growing together, and are pushing production rather than consumption. The point is, when an economy is growing, and growing because we are producing more that people, inside and outside Zimbabwe, want to buy a lot of, that growth becomes self-sustaining.

Because so much of the growing wealth is fairly widely distributed, rather than being held in a few thousand pairs of hands, it means a majority of the nation is benefiting from that growth, directly.

In many ways, the biggest achievement of the Second Republic has been to end what seemed to be an endless cycle of boom and bust, with no real growth, and finally put Zimbabwe on the road of real growth, year after year, decade after decade. We had to go through two years of fairly bad times to get rid of decades of wishful thinking, cheating, and a belief that shuffling paper was the route to personal wealth.

Now we are starting to collect, despite Covid-19 and other hangups. This is why it is so important to change our thinking from “recovery” to “growth”, and for our business sectors to start thinking about how to grow, rather than how to survive. That Vision 2030 of moving forward to an upper middle-income economy in a decade was not a dream, it was a forecast of the future that is attainable, so long as we all put our backs into what we do to earn our daily bread.

Now the Government has fixed its finances and monetary policy, that effort will no longer be wasted by a burst of hyperinflation every decade as we crash again. So now our future is where is belongs, in the hands of producers, and this year they are pushing the envelope, and next year they can do the same, and the year after.

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