Nds1 Adopts Our Recommendations

THE National Development Strategy One (2021-2025) (NDS1) was finally launched this week.

The Brett Chulu Column

It replaces the Transitional Stabilisation Programme (TSP) — October 2018 -December 2020.

The NDS1 is the second of three national strategies meant to implement on the ground concrete steps towards achieving government’s overarching desire to transform our economy from low income [per capita Gross National Income [GNI)] of less than US$1 036) to an upper middle-income economy (per capita GNI of between US$4 046 and US$12 535).

The NDS1 is not a perfect document – however — it is a much improved document from the TSP. It reflects broad consultation and a genuine desire to weigh proposals and adopt them based on their merit.

We made a number of recommendations which were incorporated into the NDS1.

Warehouse receipting-exchange

In an article in this column, a case was made for the adoption of warehouse receipting and setting of an agricultural commodity exchange.

The logic behind the proposal was the realisation that the current structural set-up of our agriculture is dominated by small-scale farmers. In terms of grain, small-scale farmers were dominant even before the land reform programme that began in 2000, contributing about 70% of our maize output.

With the strategic thrust of ramping up agricultural output in cereals and oil-seeds to national surplus levels anchored by small-scale farmers using simple and affordable technologies that are expected to be upgraded with time, the best way to handle the expected output would be the establishment of an electronic warehouse system, preferably connected to an agricultural commodity exchange.

We need to explain what an agricultural commodities warehouse receipting system is.

An agricultural commodities warehouse receipting system is a network of warehouses for the storage and trading of commodities, where producers send their harvest of crops that do not perish quickly such as grains and legumes for storage. It is more than a storage facility.

Warehouses under the warehouse receipting system use scientific methods for storage of harvests so that post-harvest losses are minimised.

The warehouse receipting system has more relevance to Zimbabwe’s challenge of financing small-scale farmers without titled land.

The warehouse receipting system is also a financial innovation — farmers receive negotiable warehouse receipts that become financial instruments that are tradable and can be used as collateral for borrowing from financial institutions.

Warehouse receipting can be done electronically with the possibility of a warehouse receipting database being linked to financial institutions, farmers, tax authorities and commodity exchanges.

Warehouses are located near the farms. These warehouses can be run by private entities regulated by a state body. This is in line with the thrust of private sector led economic growth.

We proposed that the Grain Marketing Board be reorganised to become the regulatory authority for the warehouse receipting system responsible for licensing warehouses. The envisaged increase in grain and oil seed production from small-scale farmers would be best handled by a warehouse receipting system.

Clearing houses will be needed to support warehouse receipting. This is another service sector spawned. This system, evidently, will result in substantial investment that will add to economic growth.

We now turn to the commodity exchange. We proposed that an agricultural commodity exchange be established to work hand-in-glove with the warehouse receipting system. A commodity exchange is an organised market, where commodities are sold by licensed members.

The commodity exchange can be privately-owned. Government would need to set up a regulatory authority to oversee the operations of the commodity exchange. There are two alternatives available for millions of small-scale farmers to participate in the commodities exchange.

First, the farmers can form marketing co-operatives that will register as members of the commodity exchange.

This will enable farmers to get a seat on the board of the commodity exchange. The alternative is to nominate registered warehouses that are members of the commodity exchange to sell on their behalf.

We are glad government has embraced our proposals — we wait to see how these two will be operationalised and how this will differ from our nuances.

Strategy framework

In our critique of the performance review by the Treasury of the TSP, we noted that the TSP was not guided by a recognisable strategy framework. We proposed that the NDS1 be organised around a tried and tested strategy framework.

The NDS1 chose the Results-Based Management (RBM) framework to operationalise the NDS1 at all public sector levels. The RBM framework is the bridge between aspiration and performance, the difference between rhetoric and action.

Unlike the TSP, we are now very clear on key result areas, expected outcomes, performance indicators, baselines (current level of performance) targets and entities assigned to drive a specific key result area. We have a clear national strategy scoreboard or dashboard.

It will help us hold to account every stakeholder of the NDS1. A major shortcoming of the strategy framework the NDS1 has settled for is that it does not incorporate monitoring and evaluation as an integral component of the framework.

In upgraded strategy frameworks, data collection frequency and type of data and documentation expected is incorporated under a key result area. This shortcoming of monitoring and evaluation divorced from the key result area can be corrected, it is not late, a strategy document is not cast in stone, it can be improved.

Activity-based budgeting

We also argued that our annual national budgets should reflect the activities and priorities outlined in the NDS1. We presented the argument that a budget is a monetary expression of the activities driving strategy.

The NDS1 considered this proposal and adopted Activity-Based Budgeting (ABB). ABB if adhered to will ensure that financial resources are not allocated to activities that are peripheral to the NDS1. Without ABB, old and embedded resource allocation mechanisms will award activities that are not strategy-critical.

My disappointment with the NDS1 is that though it has very elaborate details, it does not cost the resources in financial terms needed to drive activities underpinning the NDS1.

It is a serious weak point. If we cannot attach monetary value to intended activities beforehand we are as good as having no strategy.

Funding the NDS1 is a key success factor in that little external funding is expected to support the activities planned to drive NDS1.

It is not enough for the NDS1 to list the likely sources of funding; tax, loans, grants and private sector resources. It was expected that a whole thematic area on funding should have been set aside so that the issue of funding the NDS1 is given more careful and extensive thought.

The NDS1 says economic growth will be private sector-led yet the pre-budget strategy paper shows that in the first three years the NDS1 government is expected to fund at least 70% of the expected economic growth. Such contradictions need to be expunged from the NDS1 implementation matrix. Funding is the single biggest risk to the NDS1. It is not too late to revisit this matter.

The broad consultation leased to come up with the NDS1 should be carried forward at implementation level.

Chulu is a management consultant and a classic grounded theory researcher who has published research in an academic peer-reviewed international journal. — brettchuluconsultant@gmail.com

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