29 November 2017

Zimbabwe: 'Return to Economic Fundamentals'

Photo: IRIN
Most basic commodities are not readily available on Zimbabwean shop shelves but can easily be found on the streets (file photo).
opinion

The exit of President Mugabe from the echelons of state power saw the ascendancy of interim President Emmerson Mnangagwa with the blessings of the military after a week of a military coup veiled as a military operation code named "Operation Restore Legacy."

It is clear that the new presidency did not arise out of a popular democratic process and is heavily backed by the state authenticating the long held view that Zimbabwe is a Military State.

The interim president inherits a tattered economy, rampant anti-developmental corruption, high levels of unemployment, dilapidated infrastructure, skewed macroeconomic policies, a deeply entrenched military in civilian politics and political culture of disregard for the constitution and the rule of law. Expectations among citizens are high that this "new" political dispensation will be characterised by a period of economic relief and at minimum restore the rule of law. At the nerve centre of the economic malaise has been low productive capacity from the supply side of the economy, massive de-industrialization, informalisation, low economic growth rates, unemployment, poverty, poor social services, poor revenue inflows and a ballooning debt close to US$10 billion.

The Crisis in Zimbabwe Coalition calls for the urgent resuscitation of the economy by returning Zimbabwe to basic economic fundamentals and embracing a social market economy that will balance market forces and social protection among citizens.

We restate that in the current global wave of democratisation in Southern Africa, without a functioning constitutional democracy, sustainable economic development is not feasible.

Going forward, we submit to the nation a 'menu of economic ideas' that can help Zimbabwe to resuscitate the economy under the current political situation. Zimbabwe needs a radical redirection of the existing order and these changes should be met with key appointments of competent personnel based on merit and not patronage for the President's Lacoste faction and appeasement to the military. We also call for the immediate and unconditional demilitarization of the state.

The following are the priority areas that the interim government led by President Mnangagwa should address as follows:

Macro-Economic Reforms

Past macroeconomic policies that have been adopted by the Zimbabwe government since independence lacked a consistent pro-poor and inclusive framework. The government came up with no less than 15 macroeconomic blue prints but none has managed to comprehensively address the structural binding constraints afflicting the economy.

Macro-economic stability that is pro-poor, inclusive and human -cantered with increased fiscal space, a high degree of competitiveness, a healthy environment for domestic and foreign investment, a strong export economy and high degrees of innovative capability will take Zimbabwe forward.

In this case, Mnangagwa's government must be in a position to play its facilitator role in the economy, enhance real sector performance, currency stability and measures to ensure the financial sector, especially banks are stable. Populist strategies and policies employed by former President Robert Mugabe should be a thing of the past.

Central is how government can improve revenue generation to release funds into the productive sector in order to create jobs and grow the economy.

There is therefore need to enhance the fiscal space through adopting a sustainable debt strategy, re-prioritization of expenditure; restructuring State owned enterprises, rationalization of the size and structure of the Government, taxation reforms, promoting domestic investment, leveraging remittances from the Diaspora, attracting Foreign Direct Investment (FDI) and re-engaging the international community.

Productive sector reforms

Revival of the productive sector in a country were the Small to Medium Enterprises (SMEs) have become the backbone of the economy can never be over emphasised. The productive sectors of an economy, which include mostly the manufacturing sector, the agriculture sector and the mining sector, are the key pillars through which an economy is expected to grow.

The growth would mostly be through forward and backward linkages within the three sectors as well as with the rest of the other sectors of the economy. The productive sectors are also critical instruments through which economic policies can be used to influence the economy's direction.

In each of the three sectors, there is need for policy reforms such as land and mining policies which are not investor friendly, legal reforms such as property rights as well as institutional and administrative reforms such as restructuring key institutions within Ministries.

The new interim government should also take advantage of the entrepreneurship mind among Zimbabweans that was largely driven by lack of employment. Pro-small scale financial services and credit facilities should be prioritised to support the growing small to medium sector. Together with a redesign of technological support appropriate to current context, an adaptation of market systems and supply chains, not exclusive to, but also inclusive of high value export markets beyond primary commodities.

Active intervention of the state, not through Command and Iron fist policies, through coordinating, facilitating and providing focused subsidies and start-up finances to rejuvenate the sectors should be of high priority. Of essence is the provision of stimulus packages to the informal sector and SMEs for finance easing, allowing cuts on taxes and encouraging the SMEs to do value addition to increase marketability at a national and global level.

Infrastructure Development

The interim government should prioritise investments in rehabilitation and creation of a functional infrastructure that supports production and marketing of goods and services, both locally and internationally. The Infrastructure will ensure product competitiveness, easy access to and flow of information, and is an important pillar for sustainable economic development within an economy. In addition, this will facilitate the efficient and effective provision of goods and services for the nation, penetration of regional and international markets in a manner that is equitable, beneficial and democratic to all. Furthermore, a functional infrastructure network will create employment as majority of people will be involved in all subsectors of infrastructure and the informal sector people will access markets for their products effectively and expand their business thereby creating job opportunities and increased incomes emanating from accessible markets which are facilitated by functional infrastructure.

Economic institutions

The major constraint that Zimbabwe faces is lack of institutional capacity to manage the implementation of good economic policies. While Zimbabwe has a history of developing good economic policies the major constraint has been the inability to come up with an enabling institutional framework for the implementation of such policies.

Therefore lack of institutional capacity to implement and evaluate economic policies has been the major constraint that has not only led to the declining economies and governance parameters but has also failed to take Zimbabwe to the next level of development.

There is need therefore to initially introspect the existing institutional capacities in order to identify the gaps and then proffer recommendations in terms of what needs to be done to reinvigorate key institutions that are critical to stimulate and manage the economic revival of Zimbabwe. Such institutions include the Reserve Bank of Zimbabwe (RBZ), Ministry of Finance and Economic Development, Zimbabwe Reserve Authority (ZRA), Auditor General & Public Accounts Committee, State Procurement Board (SPB), National Economic Consultative Forum (NECF) and the Zimbabwe Investment Authority (ZIA).

Socio-Economic Transformation

Major focus should be on modern, equal, peaceful, open and pluralist society where everyone enjoys equal opportunities in life. Health institutions must be reformed to ensure that there is medical care for all in line with section 76 (1) of the Constitution. Health budgets should at least thrive to reach the 15% recommended by the Africa Union (AU) Abuja Declaration of 2001. In the medium to long term the state must establish a National Health Insurance scheme that is publicly funded to ensure that healthcare is available to every citizen who needs it. Reform of the healthcare system will require a health fund where donors must contribute.

In line with the bill of rights as in section 75 (1) of the constitution there must be education for everyone, and the promotion of technical universities that focus on engineering and natural sciences as well as vocational training.

In addition, Zimbabwe must bear tenets of a welfare state that prioritizes the social protection of all its citizens. As a result, the state must provide social assistance to the vulnerable such as the elderly, children, orphans, war veterans, unemployed and women in the form of pensions and long-term care insurances. On the other hand, collective labour bargaining with minimum wages should be promoted.

A vibrant spectrum of cultural and religious diversity is also an important aspect of a society that guarantees happiness for everyone. The idea is to create a society where people are well educated, healthy, and happy and enjoy a high standard of living as well as freedoms to exercise their choices and contribute to economic growth. For full realization of this there must be equal representation of men and women in key spaces in line with the new constitution and elimination of all forms of discrimination against women.

Constitutionalism, Public Leadership & Governance reforms

Legitimacy is a cornerstone of economic rehabilitation in Zimbabwe. The entrenchment of the military in civilian politics only serves to further dent the legitimacy of the state. As such we maintain our position that a devolved constitutional state where the bill of rights is the cornerstone of economic development with a political system built on a free and fair electoral system and a competitive multi-party system to strengthen the social contract and Government legitimacy should be a priority for the interim government and Zimbabwe has a perfect opportunity to redeem itself during the 2018 elections. The political system must allow for the principle of subsidiarity where local communities must actively participate in economic decisions that affect their day to day lives in their locality. In addition, local authorities must have the right to regulate themselves. At the same time, government needs to uphold a legal system that protects the fundamental liberties, equality before the law, respect of property rights and the rule of law and the curbing of patronage and corruption. In line with this, is to create a national value system based on Ubuntu. Politicians and bureaucrats must be subjected to a high standard of professionalism, accountability and the law. Without upholding a constitutional democracy and the

Crisis in Zimbabwe Coalition

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