By Shame Mugova
Zimbabwe had a change of government in November 2017 which brought optimism that the economy might be guided on a recovery path following depression for several years since the turn of the millennium. Operation restore economy has not been launched and some people have already started to lose faith in the current administration’s ability to turn around the economy whilst some still believe the economy will be revived and grow again.
There is no clear economic vision or policies which have been implemented yet by the government. The industry and firms which had closed have not reopened and the economy seems to be still in a dysfunctional state. It is the hope of Zimbabweans that they will one day have a vibrant economy, employment and the dilapidated infrastructure will be rebuilt.
The process to rebuild the economy will not be an easy one it will require the determination, will and unity amongst the Zimbabweans to rebuild the fallen pillars of the great house of stone. Whilst reviving the economy for the country, to be once again the breadbasket of Africa is not a vision but backward looking. Things have changed, we are competing with other countries producing genetically modified crops, with economies of scale, highly mechanized and with better technology than ours.
Fundamentals have changed since the 80s and 90s though some may argue that food is always required as it is a need, we need to be innovative to restore ourselves and compete other producers of food in Africa and the world. Tobacco might have been called the gold leaf during the 1940s when it was produced in Zimbabwe, to think that we can restore our production levels to the same levels and grow our economy through the same means as before is utterly false. Economies are dynamic things have changed, we need innovation and analysis of our new opportunities and threats.
Through the land reform for instance we regressed through land fragmentation, destroyed commercial farming and reverted to subsistence farming. The countries that have developed did so, on the premise of land consolidation, economies of scale and mechanization, consequently their rural population declined whilst urban population increased as they got more industrialized.
Many Zimbabweans think agriculture as the mainstay of the economy will lead to recovery. Kodak went out of business because to them it was business as usual whilst they failed to realise that the new business had to do with sharing photos and Facebook saw the opportunity and today it is one of the largest business entities. Businesses that used to produce radios, cassettes recorders, Walkman’s, discman went out of business because economies are changing through innovation.
The economy is dynamic it doesn’t remain stagnant, this eludes most people, it seems to many the idea that we used to do it this way, is the most dominant ideology. When the Zimbabwean economy was functional, we used not to import from South Africa and other countries mostly all the products we can produce. The reason why we are importing products we can produce is that it is costly to produce in Zimbabwe and the country has structural problems such as power cuts amongst other problems.
If we are to revive our economy how are going to compete on costs? We used to produce cotton, process it into cloth, and produced clothes for export markets in our factories, on the contrary now we are importing used clothes. We have over 90% unemployment and most people are now working in the informal sector.
There is a lot that needs to be done to revive the dead industry. Our reasoning and analysis seems to border around the premise that we used to produce raw minerals for exports which might be the same economy that we used have for close to hundred years ago.
A country like Japan used to rely on the textile industry and with time they had a vision to develop their electronics and automobiles industries. In the same vein Zimbabwe must be able to craft an economic vision, strategy and plan to develop into a formidable force which can compete in international trade in certain specialized sectors of their choice. It is not clear what the country’s comparative advantages are, despite that the country produces various raw materials.
In 2009 the country abandoned its currency and adopted the United States dollar and other currencies however since then it has always been postulated that the country will reintroduce the local currency when fundamentals are right, despite that fundamentals were not right, treasury bills, bond currency were introduced, and the Real Time Gross Settlement not backed by actual money was introduced.
The current state of our monetary system is in jeopardy however we still hear of the same promise that we will have local currency when fundamentals are right. What are the fundamentals and what is being done to make them right and the period required for that is not known. The central bank still doesn’t have the independence and integrity to be trusted with printing money. If the country is not able to fix its monetary crisis reviving the economy will always be a pipeline dream.
Repealing laws like indigenisation may not yield the much-anticipated benefits unless otherwise policies are made to attract foreign direct investment. We seem to lack quantified impact of policy changes i.e. the change of indigenisation’s policy impact on foreign direct investment. Economic policies should make an impact without the need to be preached, if an economic policy needs to be preached like the gospel then definitely such a policy is not a good economic policy.
We had a fiscal policy statement that failed to influence the level of supply and aggregate demand, increase level of economic activities, investment and business. The people managing our economy need to think, innovate, develop and create real policies that will lead again the economy to prosperity, a lot needs to be done, there are no signs that the economic management and restoration is moving towards the right direction.
Shame Mugova is a Financial Analyst/Economist and Business Consultant: Email [email protected]