IT does not take a genius, rocket scientist or economist to conclude that the government has failed dismally in addressing pressing economic issues in the first nine months since Zanu PF won the elections.
The hard-hitting liquidity crisis, a shrinking national revenue base epitomised by continued company closures and growing unemployment are clear indicators that all is not well and the time for cheap slogans is over.
I am happy that Finance minister Patrick Chinamasa and the State president have also had “Damascus Moments” and now realise that the country needs to review some of its policies especially around indigenisation and empowerment as the 51% threshold has been viewed ads a deterrent to foreign direct investment.
If we are to measure the success or failure of the government in the first six months in office we have to predicate our conclusions on the policy thrust of the government.
I will begin by making a brief analysis of the much talked about Zimbabwe Agenda for Sustainable Socio-Economic Transformationwhich was launched six months ago amid much pomp and funfare, popping of champagne and flowery speeches.
The dominant theme of ZimAsset is to “work towards an empowered society and a growing economy” with the objective of “achieving sustainable development and social equity through indigenisation and empowerment and employment creation.”
ZimAsset is also touted as a “cluster based, result-based economic policy”. Ambitious economic growth targets with projected annual growth have been set as follows :
- 2013 – 3,4 %,
- 2014 – 6,2%.
The document postulates that annual economic growth rate shall reach an optimum target of 9,9% by 2018. The blueprint also sets out sub sector targets for specific areas of the economy such as agriculture, mining and construction. At the current rate it will be next to impossible to achieve these targets.Importantly the four key thematic areas or clusters which ZimAsset targets are:
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- Food security and nutrition,
- Social services and poverty, eradication,
- Infrastructure and utilities,
- Value addition and beneficiation.
Economists estimate that out $27 billion is needed for implementation of the programme and there are few signs that the government has sourced much if any funding for the programme. The ZimAsset policy blueprint is predicated on a number of important assumptions namely:
- Improved liquidity and access to credit,
- Establishment of sovereign wealth fund,
- Acceleration of private public partnerships,
- Increase in foreign direct investment,
- Establishment of special economic zones,
- Engagement with international multi lateral organisations such as the World Bank and the International Monetary Fund.
- Value addition policies.
The Finance minister has already indicated that engagement with multilateral institutions have hit a brickwall since the country seems unable to repay its debts. Foreign direct investment will continue to be a challenge in the face of disabling policies and lack of respect for property rights.
Major implementation and operational challenges:
- Policies that discourage foreign direct investment such as the Indigenisation and empowerment laws as well as policy inconsistency by the government,
- Crippling domestic and foreign debt – currently the foreign debt is $6 million,
- Shrinking revenue due to collapse of productive sector. It is estimated that about 700 companies closed in Harare and over 400 companies have closed in Bulawayo in the past ten years. This has reduced the country’s revenue base,
- Lack of remittance by the mining sector in particular the diamond sector which has the potential of generating up to $2 billion annually according to former Finance minister Tendai Biti. The Zimbabwe Revenue Authority recently garnished about $45 million from mining companies in Chiadzwa after they failed to honour their statutory obligations.
- Negative balance of trade- low exports against high imports. This is largely due to the high cost of production. As long as the cost of production in Zimbabwe is high it will be difficult to attract investors and thus stimulate economic growth.
- Corruption at all level continues to be a major challenge and deterrent to investment and sustainable development. A lot has been said and little done about corruption and only small fish are usually targeted while big fish swim in opulence These are some of the contradictions and realities that have and continue to face the government in the next five years.
Failure to address these challenges will result in dismal failure to implement ZimAsset. There is little or no sign that in the past nine months there has been any tangible results in terms of deliverables vis a vis ZimAsset as a so called “results based project”. At the moment the clusters are available, but there are no results.
Dumisani Nkomo is a political commentator and chief executive officer of the Habakkuk Trust. He writes in his personal capacity. www.dumisanionkomo.blogspot.com
