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Zimbabwe: Liberalise Economy the Zim Way
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 Published by the government of Zimbabwe |
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The Herald (Harare)
EDITORIAL
27 March 2008
Posted to the web 27 March 2008
Harare
Since the IMF and others forced the liberalisation of the Zimbabwean economy in the late 1980s and early 1990s, the country has seen its industrial base damaged significantly.
While there were good grounds for a carefully planned liberalisation, the way Zimbabwe was forced to open all its markets in one fell swoop was not the best route to liberalise. We concur that the planned economy inherited from the UDI era was starting to come apart and that a significant injection of market-driven reforms was required to create sustainable growth.
But, in retrospect, it would have made better sense to have liberalised the manufacturing sector first and the consumer sector last, although that would have been almost impossible under the sort of pressure being brought to bear by Western-led institutions such as the IMF which tend, consciously or unconsciously, to seek markets for the goods of prominent members.
One unforeseen problem on the Zimbabwean side was the desperate desire by too many in Zimbabwe, and especially a significant segment of the urban population, to own the latest Western-made status symbols and consume imported luxuries. The result has been an urban elite owning large cars and sports utility vehicles, using fancy domestic appliances and consuming imported luxuries by the tonne, and a lot of other Zimbabweans suffering as the market forces concentrate wealth in the hands of a very few, hardly any of whom want to use their new wealth productively.
Having paid off the worst of the foreign debt incurred in this imposed liberalisation, Zimbabwe now needs to return to the path it could have followed if it had been able to liberalise on an indigenous plan. To take one obvious market, that for motor vehicles. There is a need to get both assembly plants back into maximum production and even to expand them so that they can meet demand.
At the same time, the vehicles that will be assembled need to be very carefully selected as to both price and fuel economy. Such a careful selection can cut the amount of foreign currency now spent on vehicles and fuel while at the same time making vehicles more affordable and easier to source. Zimbabwe needs far fewer large luxury cars and double cabs and a lot more modest cars and commercial pick-ups.
European and Japanese manufacturers have been creating and designing quality small cars for some years and now India, as part of its dramatic industrial growth, is doing the same, with some of these vehicles being fairly basic but filling the market for reliable lower-cost cars.
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It should be possible for Zimbabwe to concentrate on assembling a modest range of suitable vehicles. The most obvious strategy would be to find a modest vehicle that can be upgraded easily, so that the basic car could sell for an affordable price but those who wanted some extra luxuries could have these added without too much extra cost. At the same time Zimbabwe needs to join the growing number of developing countries that ban imports of second-hand cars, recognising that these are a false economy with their inefficient
engines and desperate need for expensive spares. If the Government feels that banning imports of large luxury vehicles and second-hand junk is undesirable, then racking up the duties will have a similar effect. The net result of such a change will be to cut foreign currency spending on vehicles and fuel, helping to ameliorate a major inflationary pressure, and provide more jobs for Zimbabweans.
It will have a secondary, although vital, benefit of helping Zimbabwe control the emissions of greenhouse gases. All it requires is a switch in desires by the financial elite of the country, plus some determined Government action.
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