By Byron Mutingwende
A dialogue by the Poverty Reduction Forum Trust (PRFT) has brought optimism that the new dispensation will bring a positive turnaround of the economy if it implements some of the strategies proffered by stakeholders.
In his synopsis of the state of trade, investment and industrialisation towards a new economic reform agenda, Rangarirai Machemedze from the Training and Research Support Centre said Zimbabwe today continues to suffer from persistent budget and trade deficits.
In addition, the country has also been experiencing persistent de-industrialisation and in-formalisation of the economy. This de-industrialisation has seen about 4,610 firms closing between 2011 and 2014, resulting in 55,443 job losses (LEDRIZ 2016). Real GDP is estimated at USD 16 billion in 2016.
“Between 2009 and 2011 the economy rebounded following the introduction of the multiple currency system with growth rates of 11%. However, growth decelerated sharply to 4.5% in 2013 and has continued to decline in 2016 and 2017. External debts are at approximately 60% of GDP and international reserves are very low at an equivalent to less than three weeks of imports. Although manufacturing remains significant with 10-15% of GDP and employing 5% of the workforce, capacity utilisation has fallen below 35% and continues to fall due to a myriad of challenges,” Machemedze said.
Zimbabwe is experiencing structural regression partly caused by low domestic demand; capital constraints; antiquated machinery and machine break-downs; competition from imports; high cost of doing business; cost/shortage of raw materials; and power and water shortages.
“Opening Zimbabwe for business means attracting investment, foreign and domestic, that is required to increase production, jobs, fiscal space, exports and eventually the happiness index for Zimbabweans. It moves the economy beyond stabilisation. Opening up the economy also calls for local business to improve on their efficiencies and competitiveness in order to brace for competition from foreign investors. Having noted the above, there are two fundamental issues that need to be reconciled that the current government is seized with. These are the Open for business mantra (which suggests more trade and investment liberalisation-free market fundamentals) and the Command agriculture embracing livestock and fisheries,” Machemedze added.
Dr Gift Mugano, the Executive Director of the Africa Economic Development Strategies said Government has capacity to deal with the central problems of unemployment, liquidity challenges, trade and fiscal imbalances, infrastructure gaps and poverty. He recommended a number of strategies.
“There is need to set up a lean and robust cabinet as well as employing technocrats in key positions such as Permanent Secretaries and State Owned Enterprises. Government should decisively deal with corruption; implement currency reforms; expedite doing business reforms; embrace a debt clearance strategy; foster respect of property rights and rule of law; formulate a National Development Plan towards vision 2030; and inculcate transformational and behaviour change within the civil service,” Dr Mugano said.
Dr Godfrey Kanyenze, the Executive Director of the Labour and Economic Development Research Institute of Zimbabwe (LEDRIZ) said in the current phase of recovery, the mining sector is emerging as the main sector capable of autonomous growth.
He noted that the restructured agricultural sector also has potential of supply-response to improved conditions, as well as tourism.
“However, growth in the manufacturing sector appears more dependent on the internal demand generated by the two main driving sectors (agriculture and mining). Hence, the quality of policy in the mining and agricultural sector will in the main be the major determinants of the rate of growth of the economy,” Dr Kanyenze said.
He encouraged the state to use its autonomy to consult, negotiate and build consensus with social partners, at the same time building capacity to effectively implement economic policies.
Dr Charles Mutasa, a Board Member of the Poverty Reduction Forum Trust said there is need to enhance capacities of both local leadership (councillors ) and their secretariat (council employees). He said private–public partnerships are key for devolution and economic development.
“In the same vein, there should be transparency in procurement processes. Government should design measures for transformation by introducing monitoring and evaluation processes for feedback and accountability. The revenue collection capabilities of the Zimbabwe national Road Administration (ZINARA) and the Zimbabwe National Authority (ZINWA) should be revamped. Through research, performance monitoring and policy advocacy by civil society organisations is essential,” Dr Mutasa said.