Lovemore Chikova Development Dialogue
The success registered under the Transitional Stabilisation Programme (TSP) is a clear sign that Government is on course to achieving its target of an upper middle income economy by 2030.
The TSP was the first step towards achieving the milestone that is referred to as Vision 2030.
This success of the economic blueprint launched in 2018 outlining “austerity for prosperity” measures, has put to rest doubts by some critics on the appropriateness of the programme.
Some had actually dismissed the policy as unworkable. Now, nearly two years later and towards the end of the programme in the next two months, the critics have gone quiet.
It is imperative to examine why such a sudden silence from some well-known people, including leaders of political parties and economists, who had been so vocal against the economic blueprint.
The only plausible explanation to this silence is the fact that measures outlined under the TSP have performed wonders in terms of stabilising the economic situation in Zimbabwe.
In fact, the critics did not see it coming, probably because they were blinded by their pursuit of scoring political points against Government.
But now, they have gone silent, especially after Government ticked all the boxes, one-by-one, as it recorded huge milestones in turning around the economy on the basis of the TSP.
The TSP targeted reforms in various sectors of the economy, including undertaking of projects in areas like mining, tourism, infrastructure, industry, health, youth and gender, financial sector and savings mobilisation, ICTs and the digital economy.
It also advocated for political reforms, alignment of laws to the Constitution, further constitutional amendments, governance and institutional reforms, devolution, compensation of white former commercial farmers, State enterprise reform, national budgetary transparency, competitiveness and ease of doing business reforms.
Many of the key objectives of the economic programme have been achieved, including macro-fiscal stability, laying the foundation for private sector led growth that is sustainable, further democratisation of the country, re-engagement with other nations, infrastructure development, public and social service delivery and social protection.
Key reforms in this sector included the reintroduction of the local currency, introduction of the Dutch Forex Auction and removal of fuel and electricity subsidies.
There was also the stabilisation of prices, operationalisation of the Zimbabwe Investment and Development Agency (ZIDA) and special economic zones. The Dutch forex Auction system was introduced on June 23, with the aim of fighting the exchange rate instability, ultimately leading to the discovery of the market price.
Held every Tuesday, the auction system has proved workable as the exchange rate is now hovering around US$1:$81.
This stability, as official foreign currency users turn to the auction, has killed off the forex parallel market, which had been blamed for rising prices of goods and services.
There was nothing more urgent in re-aligning the economy than dealing with the twin problems of currency instability and inflation.
The authorities managed to identify some sources of the problems, which resulted in the tight regulation of transactions on mobile banking platforms, which were in the habit of tilting the game in their favour through unfair practices. Through measures provided for in the TSP, Government managed to cut the public service wage bill from 92 to 50 percent of the national budget, rationalised posts, froze hiring except for critical posts, reformed the public finance system and the State procurement system to cut on inefficiency and leakages.
On the budget side, surpluses started being recorded, reaching $1,2 billion by June this year from perennial deficits.
Implementation of the TSP avoided the economy from being weakened by adverse factors, both internal and external.
The economy managed to hold on in the face of some illegal sanctions imposed by some Western countries, while internal factors like Cyclone Idai and droughts could not undermine the progress.
In light of the sanctions and natural disasters, the authorities remained disciplined and focused on the goal of ensuring the economy was revived, with the aim of achieving the main goal of Vision 2030.
The speculative behaviour on the Zimbabwe Stock Exchange, which was being driven by dually-listed shares, was stopped after suspension of some counters in that practice.
The Victoria Falls Stock Exchange, which will start operating soon using foreign currency, has had its operating modalities gazetted through Statutory Instrument 196 of 2020.
The stock exchange will reinforce Government’s vision of making Victoria Falls a financial hub, and through the bourse, investors can raise funds for re-investment in various sectors.
The introduction of the two percent Immediate Monetary Transaction Tax meant that more money was raised for infrastructural projects and subsidising the poor in transport and some basic commodities.
The subsidise on transport has resulted in the revival of the Zimbabwe Passenger Company, which is picking up in the rebuilding of its fleet and servicing both urban and rural routes.
Ease of doing business
The TSP managed to revive investors’ interest in Zimbabwe, especially after the setting up of ZIDA.
The investment agency had been talked about for some time, but the coming in of the Second Republic under President Mnangagwa resulted in it being pushed vigorously.
This resulted in the passing of the attendant legislation by Parliament and the setting up of the investment agency’s offices.
The setting up of ZIDA, a one-stop shop investment arm, will ensure that appropriate measures are taken to entice both local and foreign investors to consider doing business in Zimbabwe.
The strategy under TSP has resulted in enhancing the ease of doing business, as investors can now set up shop without any difficulties.
Investors are always on the look-out for countries where they will be able to set up their business without hassles, and where they can reap their rewards.
The ease of doing business is a major provision of the TSP’s success, as it enhances efficiency in the handling of investors.
As a result of the TSP, Zimbabwe’s ranking on the World Bank’s ease of doing index moved 15 places upwards last year, as the country continues to consolidate its stature on the international scene.
Major infrastructure projects are being carried out as part of the TSP to lay the foundation for future growth.
The road network system is being attended to, with the main works being on the Harare-Beitbridge Highway, which has already seen several kilometres being rehabilitated.
All this is being done using local financial resources and local construction firms, showing how the TSP has restored confidence in the relationship between the Government and the private sector.
The industrialisation and modernisation of the country needs to be backed by other necessities like constant and reliable supply of electricity.
This explains why the TSP prioritised power generations projects, with those being undertaken in Hwange alone assuring the country generates in excess of 6 900MW of power by 2023.
This will make Zimbabwe self-sufficient in electricity and an exporter of power to regional countries.
The availability of power assures confidence in investors, especially in the Special Economic Zones that are being set up in various parts of the country.
In fact, a lot has been happening in the economy, with reforms showing results in various sectors, in the process restoring confidence in business and the general public.
The Government is already working on the first Five-Year National Development Plan aimed at taking the economic reforms further and consolidating the gains made through the TSP.