The Sunday Mail
By Edgar Muzvidzwa
Economic development is not a one-day event but is a culmination of successive improvements in the business environment and upgrading of quality in competition within an economy.
The recent policy reviews and stabilising measures announced by the Minister of Finance and Economic Planning are poised to cause drastic changes on the Zimbabwean economic landscape.
There cannot be a single transaction leap forward in economic fortunes for the country. What is a sure fact is that the recent policy reviews will cause a dynamic shift in the way business is carried out in the country. The public sector reforms will establish the competitive environment which is a cornerstone for business improvement.
It was advised that parastatals performing will be reformed, and those which do not measure up will be privatised. This measure creates a business environment which encourages open and vigorous competition which leads to high productive levels.
The previous situation where Treasury was constantly expected to bail out failing parastatals was a blow to the spirit of competitiveness. There cannot be meaningful growth in productivity in an environment marked by monopoly and rewarding of organisations against meritocracy.
The indigenous policy review is a very positive step in the drive to create a productive economic environment. This policy was too restrictive in light of the country’s present need of economic growth and making the country attractive as a foreign direct investment destination. The previous administration seemed to be aware of the policy’s negative implications but none could explicitly point it out in public. The ministers confronted each other in terms of whether the policy was sectorial or universal but reading between the lines one could notice that many were not fully embracing it.
Zimbabwe needs both local and foreign companies to achieve the desired investment and productivity levels. The threat of closure to companies that failed to comply with the indigenous policy was one of the reasons that drove out many companies from the country to our neighbouring countries. The review of this policy is one of the reasons we will see a new trend of many Greenfield investments being set up in the country.
The current administration has sounded a tone that puts a lot of value on good governance. It has become clear that there is no room to entertain corruption in the country as this has been a major blow to progress in the previous years. Some projects which had immense potential could not take off a few years ago as it was alleged that Government officials were asking for millions of dollars as kickbacks prior to approval.
The former President publicly denounced this deplorable behaviour but had not yet managed to stamp it out by the time he left office. Investors are prepared to pay a premium in order to invest in well directed enterprises. They equally rank high countries that value good governance on their indices of country attractiveness.
One of the 12 pillars of the Global Competitiveness Index 2017-2018 is “Institutions”. This focuses on the efficiency and the behaviour of both public and private stakeholders. The quality of it, is determined by the legal and administrative framework within which individuals, firms, and governments interact. Good corporate governance in systems and practices is crucial for the sound and sustainable development of an economy.
The new administration gave an amnesty of three months for illegally externalised property and this will see an inflow of money that can be utilised in the financing of some capital projects. If the volume of money increases in the market the effect is for interests rates on borrowed money to go down. This encourages expansion in the productive sectors.
The Minister of Finance announced an expected inflation rate of 3 percent, reduction in the inflation rate is key for sustainable economic growth. The generality of the Zimbabweans are firsthand witnesses of how difficult it is for business to be carried out in a hyperinflationary environment.
The unveiling of US$220 million in grants and loan from China and US$1,5 billion from Afreximbank are indicators that the international community has confidence in the current Government managing to establish stability in the economy. The onus is now on the people of Zimbabwe to tell objective stories and narratives of a country which is rebounding to economic success.
Edgar Muzvidzwa can be contacted by email on [email protected] <mailto:[email protected]> or [email protected]
