The Sunday Mail
Open Economy
International financial institutions demand that we make structural reforms to our economy. Are we prepared to change our economic culture?
A few weeks ago, to the delight of some economic pundits, it was announced that the International Monetary Fund had designated a resident representative to Zimbabwe for the first time in over a decade.
I suppose elation comes from the belief that interaction with potential funders and investors could be the turning point to ignite economic resurgence; something that is true to some extent.
Anyhow, an assessment by the IMF was soon to follow.
A staff-monitored programme on economic reforms was done on our economy. Zimbabwe received a passing grade. Now, you will find that in IMF or World Bank reports, the prescribed structural reforms are geared towards a design of an industrialised economy.
While we seek to attract capital inflows and we concede to the pressures of prescribed reforms, we should ask ourselves whether we can sustain an economy structured in that expected manner.
It would be prudent that before we implement the reforms demanded by agencies such as the IMF we identify instances where our own economic culture potentially conflicts with reforms aimed at industrialising our economy.
By culture I mean conduct that we have consistently followed over time, and perspectives that have settled within us to become norms. I can identify three. First, our reward structure and economic equity we give to public institutions.
If we believe that there should be greater remuneration and perks in public institutions than in private industry, then our perspective of social equity does not sustain an industrial economy.
State institutions will become extractive and contract our economy. Resource allocation will consistently be directed towards satisfying institutional hierarchies.
Likewise, we should clarify whether or not we have an obligation to apportion some form of exceptional equity to individuals of institutional reverence. Clarity would enable us to preserve their institutional stake while relieving our institutions of patronage pressures that compromise economic growth.
Second, our inordinate political clench on the economy.
Our national ideals that are agreed upon in a political sphere can be achieved without direct involvement in the economy. This is done through regulation, which allows Government to maintain ultimate discretion of the economy without representatives being dominant participants.
Tax loopholes, labour requirements, environmental laws, product standardisation, operating licences, are just a few ways in which we can direct the economy towards fulfilling our political ethos.
Regulation is sufficient.
We tend to over-extend political involvement into economic activity. For instance, making board governance appointments of key sectors on political consideration.
Conflict of interest between regulating the market and competitive pressure from being an involved market participant is likely to arise.
This is likely to intrude on the fairness and competitive nature of the economy. This culture exposes us to decision-making that may not be for the greater interest of the economy, and allocation of resources may be exploitive of political influence.
Third, we insist on economic growth through public institutions instead of private enterprise.
An industrial economy assumes private enterprise as the creator of economic growth. We place our emphasis on public institutions. If our economic growth is to be dependent on these institutions, then innovation and ingenuity of citizens will be stifled.
It is ill-advised for a large proportion of the formal workforce, 25 percent today, to be in the civil service. The country will only develop at a bureaucratic pace. Bureaucracy lags behind technological adaptability compared to the private sector.
For instance, this is why you find our Vehicle Inspection Department offices are still manually operated while many of our youths have a high aptitude towards information systems.
Our national broadcaster delivers old television shows at poor transmission standards while we have many youthful minds proficient in using the latest mass communication technologies.
When an economy is allowed to grow on the creativity and competitive drive of private citizens, we ultimately provide local consumers with the best that the market can produce and we can export of the best internal standards.
Now, am I saying that we cannot design our economy as a typical industrialised economy? No, I am not!
Am I saying that we are an unattractive economy for potential investors? No, I am not!
However, I am saying that we have an economic culture that may need to be revised if we are to sustain structural reforms that come with industrialising our economy.
