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Zim needs policy rethink?

A report titled African Economic Outlook was

released this week. The report, which grasps

the short-term performance of individual Afri-
can economies, was compiled by the African

Development Bank (AfDB); OECD Develop-
ment Centre and United Nations Development

Programme (UNDP).

The central theme in the report is Africa’s

Growth and it also touches on other issues such as risks and policy challenges for African

economies, the impact of external financial flows and tax revenues for Africa, political and

economic governance in Africa, as well as trade policies and regional integration in the conti-
nent.

In the report, Africa´s average growth is projected to accelerate to close to 5% in 2014 and 5%-

6% in 2015, thus to levels last seen before the onset of the 2009 global recession. Growth in

Sub-Saharan Africa, excluding South Africa, amounted to 5.7% in 2013, and is expected to

accelerate to 6.9% in 2014 and 2015. This forecast is based on the premise of a gradual

strengthening of the world economy and also on improvements in political and social stability in

those African countries currently affected by conflicts.

By any standard, the above macroeconomic prospects for Africa in general, and Southern

Africa in particular are very impressive. Sadly, Zimbabwe has the second lowest growth rate in

the region, excluding South Africa. At 4%, Zimbabwe’s 2014 projected growth rate is only

above Swaziland’s at 2.4%. Its neighbours Mozambique and Zambia and even Malawi have

some of the highest growth rates in Africa at 8.2%, 7.4% and 6.2% respectively.

These statistics lead to the question – what is it that our neighbours are doing that we are not

doing as a country? One of the major reasons put forward by the report as a hindrance to

achieving high growth rates has to do with policy challenges. According to the report, growth

requires countries to pursue appropriate macroeconomic policies and at the same time provide

increasing access to key public services. As a country, it is now common knowledge, that we

are where we are because of policies that we chose to implement. As much as it is our right to

implement policies that we believe are in the best interest of our citizenry, we must be cogni-
sant of the fact that we do not operate in a vacuum. For as long as we need FDIs, we must

formulate policies that are acceptable to those who have the money. According to the report,

external financial flows into Africa have quadrupled since 2000, and are projected to reach over

$200 billion in 2014. Of that amount approximately $80 billion comes in as Foreign investment

– direct and portfolio. Are we getting our fair share as a country, if not why is that?

Africa is also receiving quite a lot in the form of remittances from its citizenry across the globe.

Approximately $67.1 billion is expected to come through such channels in 2014. As a country

are we harnessing as much as we should from Diaspora remittances? Do we have any incen-
tives for those who want to send money through normal channels? For example, how best can

we reduce the costs of remitting money into the country? Is government working hard enough

to improve confidence in our banking sector? Are we promoting financial inclusion so that a

grandparent in Chendambuya can receive money directly from a grandson in the UK? In our

view, if we are to get as much as we should, then we will be able to boost aggregate demand

The African Economic Outlook report says one of the main channels of transmission of

changes in the world economy is through commodity prices. Zimbabwe has missed several

commodity booms simply because its minerals remain deep underground, unexploited. Invest-
ment in the mining industry has remained limited for years because, as a country, we have

failed to reach common ground with investors. Trade is also key to economic growth, but again

we have – for more than a decade – failed to do meaningful trade even with fellow African coun-
tries. In fact our industry currently does not have the capacity to feed the nation, and our retail-
ers have had to rely on imports of not less than 60%.

Are we so poor that we cannot feed ourselves? What are we doing with our land? We are

surely not so poor that we have to go across the globe to beg for financial assistance? The

World Bank recently said Zimbabwe does not qualify for debt relief under the Heavily Indebted

Poor Countries (HIPC) strategy, because it has capacity for a sustainable economic recovery.

Several countries have also said they are not in a position to help the country with Brazil this

week saying “the southern African nation is too rich to beg for financial assistance”. Growth in

Zambia, Mozambique, Angola and other African countries is boosted by investment in infra-
structure and in extractive industries. Zimbabwe has all the resources to follow this route, but

only if we make radical changes to our policies.

One other aspect touched on by the report, is the issue of political and economic governance.

Countries that are currently enjoying high economic growth rates are those that have made an

unreserved effort to address issues to do with the collection and management of tax revenues.

These are also countries where there is greater determination to fight corruption and illicit

outflows of much needed cash. In Zimbabwe, however, all these practices still thrive and, in our

view, the biggest hindrance to fighting all forms of corruption is “comradeship”. When it comes

to one of our own we hear no evil, speak no evil, and see no evil.

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