The Sunday Mail
Edmore Ndudzo
I have previously written on my views on Zimbabwe’s future monetary policy.
Given that elections are behind us, it is now opportune to reflect on our trajectory in the national interest.
My suggestions are predicated on several convictions: that the successor programme to Zim-Asset should have a 10-year lifespan; and that during that period, Zimbabwe should aim for double-digit growth.
The country should also target to limit unemployment to below five percent and ensure that the inflation rate is contained below the same figure.
Further, the envisaged 10-year blueprint should be synchronised with Sadc’s industrialisation roadmap, the Africa Union’s Vision 2063, and the United Nation’s 17 Sustainable Development Goals.
I also believe Zimbabwe’s strategy documents and policies – like the Agriculture Strategy Plan, the Land Policy, the Mines and Minerals Policy etc – should feed directly into the national blueprint.
I also make the argument that 10-year period, we must the reintroduce a local currency.
The Zanu-PF manifesto promises to create a middle-income economy with a per capita income of $3 500 by 2030, and this has come to be known as “Vision 2030”.
Such an economy is built on decent jobs, broad-based empowerment and increased investments.
In March 2017, one Frank Gloves succinctly described what a middle-income economy is: “Having a secure job, being financially secure, knowing that you will be rewarded for hard work and special skill. Having an income that is around middle levels of society.
“Owning a house and having enough income to afford a few luxuries; knowing that your children will be better off financially than you. Having a better life than your parents. Feeling a sense of a community with the average workers and citizens of society.”
Vision 2030, therefore, forecasts a moderately prosperous society.
On the other hand, the MDC-Alliance manifesto, dubbed Sustainable and Modernisation Agenda for Real Transformation, envisioned a $100 billion economy by 2029, which was supposed to be achieved through annual growth rates of 10 percent per annum.
The MDC-Alliance also wanted to join the Rand Monetary Union and give title deeds to new farmers, including full compensation for white farmers.
There was also a pitch to get debt relief through sound economic management.
The point must be made that some of the substance of Smart appears to have been derived from Zim-Asset, which is not surprising given that some of the characters in the Alliance had previously expressed admiration of the policy.
However, I am not sure how they came up with the targeted $100 billion economy, since this is mathematically impossible, even if the economy – whose GDP currently stands at $18 billion – grows at 10 percent annually.
A more prudent estimate would be between $50 billion and $65 billion, unless the underlying assumption is that the $18 billion is understated.
We call this blueprint Zim-Asset II.
Local currency
In the event that the country has generated sufficient conditions to introduce its own local unit, I suggest the local currency should be named after one of the country’s founding fathers – dead or alive – either from the First Chimurenga or Second Chimurenga.
Or it can be named after one of our precious minerals or rich mineral belts. For example, Great Dyke, just like the Rand in South Africa.
The new currency should be backed by one or a combination of the country’s precious minerals such as gold, platinum and diamonds so that it doesn’t suffer the same fate as the Zimbabwe dollar.
I would advise that backing the currency with gold would be ideal.
I don’t believe that we should impose unnecessarily conditions for ourselves to adopt a new currency.
Growth targets
I am, now more than ever, convinced that during the subsistence of the 10-year plan, we will be able to achieve that we which sought to achieve.
Since the advent of the New Dispensation in November last, the country has been able to record investment commitments of more than $20 billion, including from former hostile countries.
Sino-Zim relations
But what is most pleasing is the successful elevation of relations between China and Zimbabwe from “all-weather” status to a “comprehensive strategic partnership” after President Mnangagwa’s State visit in April this year.
Sino-Zim relations date back to the mid-1850s.
This positioning and change in relationship is both timely and appropriate, and is no mean feat.
There are three different types of bilateral or multilateral relationships that exist between nations and these are: Partnerships; Alliances and Non-Alliances; as well as Non-Partnerships.
China, as the second-biggest economy in the world after the US, is now a global economic giant, but even then it still enjoys a $500 billion trade surplus with the US.
Below, in order of importance, are the relations China enjoys with other countries:
- All-Round Strategic Partnership;
- Comprehensive Strategic Co-operative Partnership;
- Comprehensive Strategic Partnership;
- Strategic Co-operative Partnership;
- Strategic Partnership;
- All-Round Friendly Co-operative Partnership;
- Comprehensive Friendly Co-operative Relationship;
- Comprehensive Co-operative Relationship;
- Friendly Co-operative Partnership;
10 Friendly Partnership; and
11 Non- Partnership Relationship.
Since Zimbabwe won Independence in 1980, our diplomatic relations were ranked at level 10 but we have now leapt to level 3.
This means bilateral co-operation between the two countries is now wide-ranging and multi-layered.
It covers economic, scientific, technological, political and cultural fields.
By “strategic” it means cooperation should be long-term and stable, transcending differences in ideology and social systems.
By “partnership” it means that the cooperation should be on an equal footing and mutually beneficial.
South Africa (2010), Algeria (2014) and Egypt (2016) enjoy the same comprehensive strategic partnership with China.
Overall, 22 countries in the world enjoy the same relationship, and these include countries such as Russia, France, UK, Spain and Greece, among others.
China can only be ignored by those who do not understand the global business matrix. For example, those in our local opposition ranks.
As recent as this year, MDC-Alliance president Mr Nelson Chamisa made uncharitable comments towards China.
This is unwise, outrageous and immature, if you ask me.
Some of his partners in the Alliance are already known for their ill-advised, persistent and strong anti-China rhetoric.
Considering China’s status, it is important to do business with China.
Considering that China’s total bank assets stand at $40 trillion, while total bank deposits are at $27 trillion, it provides scope for local banks to form strategic partnerships with them.
So, Zimbabwe can leverage on its relationship with China in order to achieve middle-income status.
Engagement and re-engagement will, therefore, be key.
Double-digit growth
In any case, Zimbabwe can always look to the China for inspiration in its endeavour to record sustained double-digit growth.
Closer to home, in Africa, Angola at one time after the end of its civil war between MPLA and Western-backed Unita, almost became a very good example worth emulating.
However, the sharp drop in oil prices put brakes on economic growth.
Thank God, oil prices are now recovering.
Overall, the pillars and or drivers of Zimbabwe’s envisaged economic growth in the next 10 years, like in the past, will continue to be agriculture, mining, tourism and manufacturing.
Already, agriculture employs more than half the population, contributes 25 percent in export receipts, including 60 percent raw materials to the manufacturing sector.
It currently contributes between 11 percent to 16 percent to GDP.
The contribution of the sector to the economy is likely to improve given increased tobacco output, which rose from 58,5 million kg in 2010 to surpass the current record 240 million kg. Tobacco exports are also expected to rise to $1 billion this year.
In my view, Zimbabwe has potential to produce over 365 million kg per season with more support to farmers.
Again, the tendency and practice has been to rely on Chinese investors.
Command Agriculture is already proving its worth and value in gold.
Our silos are reasonably stocked with our staple food maize stocks and reasonable deliveries are expected; in fact, they have started arriving at our depots.
There are positive spin offs such as food security, employment creation and socio-economic gains that can be derived from agriculture.
New thrust
Zim-Asset II, however, has to strive to build dams and water reservoirs, acquire of irrigation equipment in order to reduce dependence on rain-fed agriculture, including increasing yields.
Likewise, mining production figures so far this year are pleasing and encouraging, especially for gold, platinum, coal and diamonds.
Gold output is forecast to rise to 30 tonnes this year, while diamond production is expected to reach 4,6 million carats.
No doubt, lithium will also be a game-changer, given rising global demand.
The mineral has begun to be called “white petroleum”.
The expected revival of Ziscosteel may have a positive impact on the iron, steel and chrome industry.
In addition, the influx of tourists, especially after the upgrade of Victoria Falls International Airport, more than justifies the investment into these projects.
The upgrade of the Robert Gabriel Mugabe International Airport is now underway, and there are also plans to upgrade smaller airports in Masvingo (Buffalo Range), Mutare, Beitbridge and Kariba.
Tourist arrival figures increased from 2 million in 2016 to 2,2 million in 2017 and indications point to even more growth this year.
Capacity utilisation in industry has also shot up to 50 percent.
Financing for necessary retooling and modernising is expected to come from increased inflows of FDI.
Service industries such as ICT, banking and finance are also expected to grow.
I will also submit that building, repairing and maintaining enabling infrastructure is key to achieving the set goals under Zim-Asset II.
Edmore AM Ndudzo is the first black Treasurer of the City of Harare and was lead consultant in crafting and compiling of the Public Finance Management Act of Zimbabwe (2009)
