How come our government doesn’t get this?

By: 
Brian Sedze

THERE is no need to be a Nobel Prize economist to decipher that the economic pains ghost of 2008 is reincarnating at alarming speed. It equally doesn’t need a prophetic calling to decipher that we are now on a downward spiral into an economic abyss which will manifest in empty shelves, parallel market for commodities and cash, poverty, desperation and increased default on salaries.

The omission to act by our leaders is either incompetence or a deliberate omission on the platter of political expedience. I chronicle hereunder my take on challenges and low hanging solutions to the challenges bedeviling our country’s economic success.

First and foremost, it is imperative that we acknowledge that we are broke and delinquent. We should therefore drop the bravado. Zimbabwe is now akin to an orphaned destitute which depends on the benevolence of the entire global village. The way to go about it is not to bad mouth potential benefactors. The mouths of our leaders are often the gate to most of our misfortunes.

Despite our political grandstanding, we have to take it in our stride that even if it is sordid, obnoxious, putrid and uncomfortable, the bare truth still remain that our country will not get out of this economic mess without finding lost love with USA, UK and maybe the Group 7. The high sounding ten points and ZIMASSET are good intentions devoid of pragmatism without world support (which we must read as USA, UK and G7). The time for USA and UK demise is not now, so we just have to play ball. As it is we are ahead of times in our economic affiliations anchored on “look east”.

Currency reform is unavoidable as the use of the strong United States dollar by one the weakest economies is neither sustainable nor practical. The country has not only lost the monetary and fiscal space to manoeuvre but has additionally lost its competitive advantages with regional peers. We are now a regional supermarket.

The currency issue is a cause of massive uncertainty such that the US dollar is leaking from our economy to stable and practical jurisdictions. The Finance ministry and the central bank have to shy away from sentiment and deal with reality. The reality is that the economy will be on a downward spiral without currency reform.

It is also important to bite the bullet and accept that the agrarian reform was a complete disaster. Productive land was allocated to incompetent and lazy ‘farmers’ with inadequate resources and no passion for farming to the detriment of an agro-based economy. To the underserving land beneficiaries, farming is just a fad and side-kick business. The farm is also a place for weekend imbibing. We are now having to import everything from fruits to maize; it’s a far cry from our bread basket African jewel status of 1980.

Farming is dead along with it downstream industries. Our leaders watched with indifference, confusion and incompetence whilst the world moved with great speed in adopting new farming technology, expertise, methods and processes. As it is, the country’s output per hectare is as low as a third of our regional peers.

The government must get into the business of agriculture reform by reversing this. The starting point is undoing this land reform madness by reallocating the land to competent, passionate and resourced farmers through a world-open tender system. 99-year leases must be abandoned as they are not only promoting incompetence but also entrenching a new yet incompetence elite – networked, undeserving and completely clueless pseudo farmers. Land must, ideally, be for everyone.

It is also a strategic imperative to develop a framework for investors to come and commercially utilize land. Agriculture ministry, Arda and Agritex should also recruit (and pay) new skills from the world to enable transfer of new skills, technology, methods and processes. In the years of madness caused by fight for political space between Zanu PF and the MDC-T, we are way at variance with best farming practices. We simply have to acquire new ways of doing agriculture things.

It is wishful thinking, warped dreaming and impractical that that there is going to be some cash injection into the economy. No one is likely to invest in a kleptocratic and incompetent country like Zimbabwe. There will be no cash injection of significant proportion from any one including but not limited to China, Bretton wood institutions, Japan, South Africa and other private investors. We are a poor country with no sense of austerity. We, in addition, are destitute, delinquent and a bad debtor fond of bad mouthing creditors. We cannot be trusted as we are serial flip floppers on policy and we are always in an unending election mode.

The solution is easy! There should be commitment to political reform, solve the succession issue, be consistent on policy, stop bad-mouthing potential world partners and implement tough austerity measures. The ruling party and opposition must find each other so they cause the recalling of ZIDERA.

Brand Zimbabwe is now sordid and stale such that it only appeals only to those who have an unhealthy fixation with sovereignty. The brand is prohibitive to investment, talent retention and tourism growth. It’s an urgent requirement that we repackage brand Zimbabwe. Brand Zimbabwe must promote viable and new industries in tourism, education, services and transport among other target sectors.

I wonder why it is escaping our leadership that there is a need to frame a disruptive, engaging and new message to the world on brand Zimbabwe. The country also needs new brand ambassadors with global appeal for each target industry. The opposition must also find the ruling party so it adds a voice on the legitimacy of the ruling party.

The knee-jerk and ill-thought out reaction on the import and export chasm is often deployment of “splendid” isolation techniques like increases in duties and import priority lists. This reaction, devoid of correcting economic fundamentals, only serves to drive the economy underground. Underground, parallel economy symptoms will be shortages, poverty and unemployment. The import and export gap can, for a start, be resolved by currency reform.

In addition, there is absolutely no need to “revive” all industries. There is no need for government support revival of all and sundry. Self-sufficiency is no longer a viable economic narrative. The government policy on re-industrialisation is being driven by incompetent lobbyist ‘industrialists” who destroyed the once vibrant sector they inherited from Anglo Saxon industrialists. The leadership must invest in sectors the country has comparative and competitive advantage like tourism, services, transport hubs and education.

We all know why the country is not competitive in target industries. There is absolutely no need to invest energy and intellect in expensive and useless researches as is the present case on “ease of doing business”. The reasons are currency, archaic equipment and technology, old methods, multiple investor gateways and corruption. Exit these malaises and easy of doing business is restored

Indigenisation is a mess, especially when superintended by an excitable minister who loves the scotched earth policy. That law must be repealed until such a time we have brand Zimbabwe renewed. Capital is a coward and it thrives on certainty or reasonable probability. The indigenisation and economic empowerment laws are opaque and uncertain. At the moment, most Zimbabweans do not adore the law as it is a looting and feeding trough for a few.

The tax base keeps dwindling due to low disposable income caused by high unemployment and low capacity utilisation. In addition, to austerity there is a need for a paradigm shift in tax collection methods, systems and procedures. The tax collection systems are no longer in tandem with economic realities. The formal sectors are dead. The whole economy is almost now an opaque parallel economy driven by the unbanked.

The tax collection system should be reformed using a residency or household-based system. In addition, a transaction and lifestyle-based tax system running parallel to the present methods would be ideal. A vendor-driven and underground economy should not be business as usual for the tax collector.

I think a country with millions in the diaspora and millions thinking of emigrating has a need to have a structured way for the diaspora to invest in new industry beyond consumption and housing. The starting point is to give them a voice in the political processes. After the political voice, it becomes an economic imperative to provide investment incentives and deployment of an alternative stock exchange that easies investment processes.

We have to conclude that the solutions to the economic malaise are there for anyone to see. A cabinet full of professors, doctors and masters of myriad disciplines fails to capture the low hanging fruits that an ordinary man in the street can see. The inaction in implementing simple solutions is surely either incompetence or deliberate omissions to achieve some political agenda.

Brian Sedze is the Chairman of Africa Innovation Hub and President of Free Enterprise Initiative. He can be contacted on brian.sedze@gmail.com

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