By Victor Bhoroma
Zimbabwe is a naturally endowed country with unimaginable potential across various economic sectors from mining, tourism, agriculture and manufacturing, among others.
The country has a highly diversified mineral resource base of over 60 commercially exploitable minerals with the world’s second largest reserve of platinum group of metals (PGMs) as well as billions of dollars’ worth of reserves in copper, gold, lithium and nickel.
In agriculture, the country has vast tracts of arable, flat and fertile land which can be utilised for a diverse range of products from cereals, cotton, tobacco, sugar, horticulture, livestock, tea, coffee and timber. The country is a top travel destination in tourism boasting of five United Nations Educational, Scientific, Cultural Organisation (Unesco) World Heritage Sites in the Victoria Falls, Mana Pools, Great Zimbabwe, Khami Ruins and Matopos.
Zimbabwe has over 26 game parks and attracts over 2,7 million tourists annually to these natural wonders. In human capital and skills, the country has one of the best education systems in Africa which produces a fairly competitive. It is now very common to read of Zimbabwean expatriates heading large corporations in foreign countries and making it big in engineering, medicine, hospitality, mining, agriculture, banking and finance, education and telecoms.
It is fair to say Zimbabwe has all that is required to be among the top 10 largest economies in Africa and should not be begging other nations for financial packages to resuscitate its ailing economy. Zimbabwe should not be struggling with high poverty levels, medieval diseases such as cholera and typhoid, food insecurity, economic instability and dilapidated infrastructure as is the case now.
The Zimbabwean government launched the Vision 2030 economic programme in May 2018 with the key aim of becoming a middle-income nation with a gross domestic product upwards of $60 billion by 2030. To achieve this vision, the economy would need to grow at an average of 6% in 12 years.
The Transactional Stabilisation Programme (TSP) was launched by Treasury to jumpstart this 12-year vision with specific focus on fiscal consolidation, debt repayment, public sector reforms and revenue mobilisation. The vision in itself (even though vague on specifics) is not overly ambitious as fellow African countries Ethiopia, Senegal, Rwanda, Ivory Coast and Senegal have been recording real growth rates averaging 6% in the last three years. The Zimbabwean economy grew by about 3,5% in 2018 and is expected to grow by the same figure in 2019. The government has to ask itself key questions and provide answers to tackling the following major constraints to economic growth.
Weak institutions and corruption
Great nations are defined by the strength of their institutions of governance, not by the popularity of organisations of the day, group interests or personalities. Institutions are the systems that shape human interaction such as contract enforcement, judiciary independence for rule of law and protection of property rights, transparency in governance, parliamentary oversight for constitutionalism and democracy, free and open markets.
Institutions encourage entrepreneurship, investment confidence and efficient resource redistribution by providing policing and justice systems for the adherence to common laws and regulations. The demise of the Zimbabwean economy is predicated on weak institutions of governance that are at the mercy of political interference and personal interests at the expense of long-term economic good. To rebuild the Zimbabwean economy, the foundation lies on enacting strong institutions that whip every citizen and organisation into line regardless of respective stature in society or market.
The obvious judicial independence, key custodians of economic institutions locally include regulatory authorities established through Acts of parliament such as Reserve Bank of Zimbabwe (RBZ), Insurance and Pensions Commission (Ipec), Standards Association of Zimbabwe (SAZ) and The Competition and Tariffs Commission (CTC) to mention a few. Without giving authority, empowerment and independence to these institutions, narrow political interests will always determine how economic resources are utilized in Zimbabwe regardless of the government of the day.
Bad governance and corruption are contagious in society. They build a culture of impunity, laziness, nepotism, lack of transparency and high levels of inequality that can run for generations to come. Zimbabwe now ranks number 160 out of 180 on the Transparency International Corruption Index and is coded as one of the worst countries on corruption.
To control the scourge, the country simply needs strong and independent institutions that can punish bad governance and corruption in private and public sector.
Lack of re-industrialisation policy
The lack of a clear re-industrialisation policy that focuses on the cost of doing business (creating an enabling business climate), import substitution, export growth, technology development, anti-product dumping and value addition of minerals locally is costing Zimbabwe billions of dollars each year.
The country now imports commodities that used to be produced locally including steel, soya and cereals, fertilisers, chemicals and medicines among others. To achieve sustainable economic growth, the government has to pursue supply side intervention policies stated above and maintain such for trade stability.
High levels of public debt
Though debt is not necessarily a bad state of affairs, it is the percentage to GDP and the utilisation of debt that is a cause for concern. Zimbabwe’s public debt is over $18 billion (close to 100% of GDP before it was rebased to $25,8 billion by ZimStats).
Domestic debt advanced by over $9,5 billion in less than five years with no economic growth, major infrastructure or social progress to show for it. For that reason, our domestic debt is bad debt and is a major constraint to accessing productive lines of credit to grow the economy. It is refreshing to see that the Treasury department has put necessary reforms to stop domestic borrowing to finance the fiscal deficit and has a detailed plan for debt repayment.
Economic policy covers taxation systems, national budget, infrastructure investment, money supply, interest rates, labour market, resource ownership and many other areas of government interventions into the economy. Factors of economic policy can be divided into either fiscal policy (taxation and government spending) or monetary policy, which deals with RBZ actions regarding money supply and interest rates.
The Zimbabwean economy has suffered from inconsistencies in indigenisation and empowerment, mining, monitory and fiscal policies. It is imperative to have policies that promote long-term economic good and that are not changed with change of government office bearers. Zimbabwe has had some of the finest economic blueprints that never achieved their intended goals in economic growth due to inconsistency on implementation.
Under-utilisation of land
Agriculture provides employment to over 60% of the Zimbabwean population as an economic anchor to the nation and has direct linkages with other economic sectors such as manufacturing and services.
The land redistribution achieved great strides in ensuring economic equality in the country but it dented the country’s food security status as most of the agricultural land is underutilised and millions of dollars are used to import food thereby exporting jobs to other African countries.
There is need for government to build capacity for commercial farming through training and value chain financing through banking institutions. Focus should be on identifying farmers with capacity and know how to produce strategic crops at large scale for reserve building.
Political instability focusses on political upheaval or violence, demonstrations, citizens’ insecurity, the propensity for government change and policy instability. Like other nations (mostly in Africa), Zimbabwe has had it all for the last four decades to the detriment of economic growth.
Economic growth is premised on market stability which allows for market confidence and steady flow of investments. To achieve some level of political stability in Zimbabwe, there is a need for income redistribution, poverty alleviation strategies, international co-operation and, above all, national unity so as to achieve peace.
Bhoroma is business and economic analyst. He is a marketer by profession and holds an MBA from the University of Zimbabwe (UZ).