MDC-T strategies for sustainable growth in JUICE (Part 3)

SECTION THREE – STRATEGIES FOR SUSTAINABLE GROWTH

Introduction

JUICE is a broad based citizen upliftment strategy that is ‘people-centered’ focusing on entrepreneurship, job creation, rural development and poverty alleviation.

The policy is based on specific measures to uplift and support workers, women, youths and the informal economy through skills development and vocational training and access to finance.

The policy will implement innovative, cohesive, and homegrown and empirically sound strategies to achieve economic growth. JUICE addresses some of the poor economic policy outcomes of the previous government and the structural problems inherent in a dual and enclave economy, which has impeded the participation of most people in mainstream economic activities.

The policy framework is aimed at increasing the economic and productive base by creating new wealth, meeting the needs of all citizens in spite of race, promoting clusters and development hubs (based on availability of natural resources and geography), supporting small businesses to become part and parcel of the formal economy.

This policy will promote regional value chains and systems (horticulture, poultry, piggery, fish farming) and realization of economic democracy through devolution of decision-making power. This therefore implies the imperative of strengthening the role of the state to make it more developmental to achieve sustainable growth.

JUICE strategies are as follows;

1. TRANSFORMATION TO A DEMOCRATIC DEVELOPMENTAL STATE

Zimbabwe can draw useful lessons from the developmental state model of the East Asian tigers: China, South Korea, Taiwan, Thailand, Malaysia, Singapore, Vietnam and Hong Kong. In these countries, the state played a critical role in initiating and sustaining growth.

This transformation has been characterised by a rapid process of industrialization, the adoption of new technologies, and the move to higher value-added production processes. A majority of Zimbabwe’s working population are either unemployed or engaged in informal employment.

A developmental state is needed to integrate the informal economy and promote a growth process in a manner that allows the majority of the labour force to be involved in productive activities. Integrating the informal economy is therefore an important building block of a strategy that is pro-poor, to create decent work and generate high growth.

The informal economy will be crucial in the development and transformation of the Zimbabwean economy. The MDC will transform the role of the state from the previous dictatorial, command and control structure to a democratic developmental state. In this regard, the state will play a critical role in directing resources towards development-oriented initiatives through enabling legislation, sound policies, budgetary support and strengthening of linkages with the private sector.

1.1 How the State Should do Business

The MDC’s economic vision is an entrepreneurial role for the state in which the government plays a critical role in designing sound, long-term national development agenda to sustain growth directing and mobilizing resources towards a common national agenda. In this role, we believe in partnering with the private sector and expanding opportunities for every Zimbabwean to participate in a modern economy with fewer impediments.

The MDC government will improve the provision and expansion of core public services such as health, education and social services. Sound management of public finances, effective borrowing, investment in human capital and the provision and development of good infrastructure systems have also been identified as key engines of growth.

A democratic developmental state will be the catalyst and custodian of a pro-poor growth strategy that focuses on job creation and investment promotion. If growth continues at double-digit rates, which we believe is possible under conditions of greater political and economic freedom, it is possible to achieve a ‘First World’ economy by 2040, the way many Asian economies did over a similar time span.

Zimbabwe’s state will stimulate active labour market programs, which generate employment, training and retraining of labour within the context of a Social Dialogue. Social Dialogue will be necessary so as to come up with the necessary quid pro quo that trades off labour market flexibility and job creation. Productivity, profitability, and growing employment will be sought through collective bargaining within the framework of a Harmonized Labour Act.

The democratic developmental state will invest in infrastructure and put in place investor friendly policies, as well as implement institutional reforms that support growth and job creation.

1.2 Political Governance

The formulation and implementation of stabilization and growth policies require us to win the confidence of both domestic and international economic actors. For us to achieve this, we will shift government processes from a highly dirigist, authoritarian and centralized system to an inclusive pro-poor social democratic economy with well managed institutions informed by the party’s democratic principles.

At the core of our policies will be respect for the rule of law and the sanctity of property rights and accountability to the people. The government will move from the current relationship based system of government which has led to cronyism and corruption, benefiting only a few connected political elite to a more functional rule based system.

The powers of Parliament will be extended to constrain executive powers and hold government accountable in the manner in which policies are implemented. Political governance will also mean effectively dealing with corruption. The MDC will implement stringent measures to control the use of public power for political gain, including all forms corruption to reduce leakages from the fiscus and promoting fairness and shared participation in the country’s economic growth.

2. CREATING SUSTAINABLE JOBS & SMES DEVELOPMENT

Creating sustainable jobs that pay a good salary is one of the primary objectives of JUICE. The MDC is determined to get Zimbabwe working again. This will mean creating new jobs and restoring job opportunities that have been decimated due to economic mismanagement.

Whereas employment levels were on an increase from 1980 to 1998, as the country inherited a functional dual economy, largely left unchanged by the nationalist Zanu PF government, the country witnessed a reversal since 1999. The downward trend started at the onset of the economic crisis in 1997 as a result of the government’s irrational policies.

This repudiates ZANU (PF)’s argument that job losses were a result of targeted restrictive measures, which in reality were only imposed after 2002. Employment levels began to drop from high levels of over 1,35 million to well under 0,9 million by 2008. Data in Figure 3 also highlights that employment levels only began to improve after the formation of the Inclusive Government, rising to slightly below 0,9 million in 2008 to slightly below 1,0 million by 2010.

Agriculture’s contribution to employment remains low at 9,7% in 2010, with 150 000 employees in this sector, compared to 27,2% in 1997 with 355 000 total employment levels in the same year. The largest drop in employment was witnessed from 2000 where employment stood at 325 000 to 20 000 in 2008, following both the Fast track land reform program and macro-economic sabotage characterized by crony capitalism benefiting the elite through quasi-fiscal activities orchestrated by the Reserve of Zimbabwe.

In the manufacturing sector, employment levels dropped from over 207 000 in 1998 to 120 000 in 2008, only rising to 145 000 following the consummation of the inclusive government in 2009. In the construction industry, the dearth of investment in infrastructure development resulted in a decline of employment levels from slightly below 80 000 to a mere 20 000 in 2010.

This is a common trend across all the sectors which resulted in total decline from 1, 350 million jobs in 1998 to 828 000 in 2008. Our jobs strategy has set a target to reverse job losses and create at least one million new jobs between 2013-2018.

Whilst this is hardly enough, it is a strategy that will mean we set the groundwork for further growth. Our jobs strategy will be based on encouraging entrepreneurship, developing SMEs, formalizing the informal economy and an extensive skills enhancement programme.

2.1 Entrepreneurship

While geared towards pro-poor development, JUICE also emphasizes the role played by business in the economy. Zimbabwe’s entrepreneurs are the strong drivers of innovation and economic growth. Their success is vital to securing the economic recovery, creating jobs and ensuring we remain competitive in a global market. Talented entrepreneurs will be supported and given the opportunities they need to establish their businesses.

Our support for entrepreneurs will include the following;

i. The MDC government will encourage a more entrepreneurial approach to economic growth by actively seeking and attracting foreign direct investments to support and help Zimbabwean entrepreneurs.

ii. Women and youths will be financially supported to start their own businesses, contributing to economic growth and employment.

iii. We will launch a ‘Make it in Zimbabwe’ campaign where ‘Proudly Zimbabwean’ products will be showcased to encourage consumption of locally produced goods.

iv. We will establish enterprise clubs and support networks to help unemployed people set up their own businesses. These will offer support and help them make the most of local knowledge and resources.

v. We will launch a Growth and Innovation Fund together with venture capital firms to encourage innovation and new business ideas.

Entrepreneurship development is thus, a key objective of JUICE. Skills development will be at the core of educational and training programmes from primary to secondary and tertiary levels.

2.2 SMEs Development

In Zimbabwe, as is the case in many other African countries, SMEs are the main source of employment, income, skills and consumable products for the poor. As such, the constraints to SMEs growth and productivity can directly contribute to poverty. The elimination of these constraints will be a priority.

i. Our SMEs policy thrust will aim at a variety of incentives and inducements to assist SMEs development by eradicating barriers to entry and a level playing field as much as possible for SMEs.

ii. Tax incentives will be offered to businesses and firms outsourcing or sub-contracting their operations to SMEs.

iii. Lack of access to credit remains a major problem for SMEs. With help from international funding organisations, we will ensure that the financial sector is capable of supplying affordable credit that the economy needs to grow, especially to the SMEs.

iv. The MDC will propose the establishment of a SMEs Exchange as a secondary stock exchange within the next 5 years.

v. Reducing the tax burden for new businesses and SMEs sized companies.

vi. Effective use of the competition regulations to reduce the power of monopoly organisations and encourage innovation.

2.3 Formalising the Informal Sector Given the extent of informalisation, there is need to promote formalization and transition to the mainstream economy. To achieve this requires a comprehensive and integrated strategy that eliminates the negative aspects of informality while preserving the significant job creation and income-generation potential of the informal economy.

The eight key policy areas for enabling transition to formality are;

i. Developing pro poor and job-rich growth.

ii. Implementing an enabling legal framework.

iii. Facilitating entrepreneurship and enterprise upgrading.

iv. Increasing access to finance.

v. Developing skills and vocational training.

vi. Extending social protection coverage.

vii. Strengthening the organization and representation of workers and entrepreneurs in the informal economy.

viii. Extending apprenticeship and work placement opportunities to improve and strengthen ties between businesses and education and training providers.

To improve the employability of Zimbabweans the MDC government will encourage:

§ Innovative, gender-sensitive training and skills development programmes, such as apprenticeship, mentorship, business incubators, entrepreneurship courses, etc.

§ Vocational training programmes designed and implemented in partnership with the private sector.

§ Basic education programmes for school dropouts.

To increase employment creation in the SMEs sector, the MDC government will encourage:

i. SMEs and cooperatives promotion and development.

ii. Labour-based public works.

iii. Business linkages.

iv. Self-employment programmes.

v. Service provision in fields such as HIV/AIDS, waste management and environmental protection, through public/private partnerships.

vi. Community-based service provision.

To assure equal opportunity the MDC government will encourage:

§ Employment of young women and mainstreaming of youths as a priority in programmes.

§ Programmes targeting people with disabilities and other vulnerable groups.

§ Education for all and in particular the girl child to equip them for employment, entrepreneurship and management.

2.4 Enhancing Skills Development

The dearth of relevant skills and the lack of fit between labour demand and supply is a serious development challenge in Zimbabwe. The necessary reforms have to transcend all the levels of education, from early childhood development to tertiary education.

Given the critical role of education and training in promoting employability and in enhancing productivity and competitiveness, in gender equity and in poverty reduction, the MDC government will:

i. Broaden the scope of early childhood development and care to cover every child.

ii. Improve the quality of education and training by promoting a partnership and shared approach.

iii. Foster a pathways approach that caters for the various aptitudes and interests of the students.

iv. Improve the match between skills demand and supply by encouraging stakeholder participation in the design and provision of education and training curricula.

v. Establish a National Training Authority as recommended by the Nziramasanga Commission of 1999, to create a more demand-driven and flexible system at the tertiary level.

vi. Develop a comprehensive National Skills Development Policy Framework for Zimbabwe.

vii. Develop a manpower recovery plan for the public sector and undertake sector-based human resource audits.

viii. Adopt and implement the migration and development policy framework.

ix. Promote return migration and utilization of Diaspora skills.

x. Adopt immigration policies that make it easier to attract skills.

xi. Engage in co-development programmes with countries with a high concentration of Zimbabweans.