The Sunday Mail
So Zimbabweans fretted and vented about the shortage of Coca Cola over the festive season. Curiously, even grown-ups who found the funny side of it had to take to social media to cynically explain why the sugary water had become scarce. The symbolism is obvious: essentially, there is an attempt to explain the shortages within the context of a deteriorating economy.
There also seems to be a proud affirmation that Zimbabwe’s success story must be defined not so much by how much she produces, but essentially by what she eats and how much she eats.
Apparently, for many, it seems crucial issues such as changing weather conditions and their impact on local agriculture is not something worth discussing.
Even the miracles being performed by our small-scale miners through huge deliveries to Fidelity Printers and Refiners is not the story for economists and analysts.
For them, these are boring stories.
Instead, they would rather preoccupy themselves with stories on the country’s ability, or lack thereof, to satisfy its sweet tooth and cravings. For the avoidance of doubt, we make no qualms about society’s cravings for food.
Without man’s love for the finer things in life — especially food — capitalism would die.
Food cravings are inherently natural.
However, the challenge for most developing countries, including our own, is how to set their priorities.
In our case, production is secondary to consumption. Somehow we believe we have a God-ordained mission to eat, whether we have produced or not.
The economy is admittedly under stress and it seems it has become the norm to demand salaries in US dollars.
Teachers recently walked hundreds of kilometres to petition Government to be paid in “Benjamins.”
Our beloved Members of Parliament also fought doggedly and passionately to get their share of the cake. In fact, they actually took the 2019 National Budget hostage and held the Minister of Finance and Economic Development, Prof Mthuli Ncube, to ransom by threatening to pass the Budget only after their demands – including for luxurious vehicles – were met.
Where the money would come from to meet these tastes does not seem to bother our professionals and legislators.
The tragedy is that there appears to be a collective inability to comprehend that we have to produce first before we eat. We have also failed to properly contextualise present problems and chosen to characterise them as a currency issue instead of a production one.
Our economic challenges are two-pronged: they are both on the domestic (fiscal) and external trade front.
We have chosen to consume rather than save and direct our resources to building our productive capacity.
Figures from Reserve Bank of Zimbabwe indicate that in 2018 alone, we earned more $6 billion in export receipts. It might be important to note that we are among the highest earners of foreign currency in Africa.
Rwanda, whose economic miracle is driving remarkable growth in the East African country, only earns a fraction of what we generate. Our challenge, however, lies in the way in which we use our resources.
It seems we continue to import consumption goods with reckless abandon.
For example, on a month-on-month basis, our trade deficit tops $100 million owing to unremitting imports of luxury goods. In some cases, the imported products can ordinarily be produced in our own country.
Competitive “local currency”
An analysis of the black market foreign currency exchange rates, or premium currency market – as the Finance Minister would like to call it – shows that our currency situation is not as bad as it is made out to be.
In fact, the obtaining currency situation has presented an opportunity for Zimbabwe to enhance her productive capacity and increase revenues.
The so-called premium rate presently hovers between 2,7 to 3,5 RTGS to the US dollar. At this rate, the surrogate currency is, therefore, comparatively stronger than some regional currencies.
South Africa – the continent’s biggest economy and our major trading partner – has a currency (the rand) that is trading at 14:1 with the US dollar.
Conversely, with 1 bond note one can get close to 4 rand. The same can be said for countries such as Botswana, Zambia, Mozambique, Malawi and Namibia.
While there is some discomfort when a currency loses value, a stronger currency is not necessarily in the best interests of the economy. The currency wars between USA and China are quite instructive.
Washington accuses Beijing of pegging its currency at a lower rate in order to prop up its exports. Likewise, Japan, which is one of the world’s largest export economies, has always been mindful that a stronger yen would hurt its export competitiveness.
As such, the Asian country always actively seeks ways to ensure its currency does not trade at par with the US dollar. But most importantly, most of these major economies are very clear that their national currencies are anchored on increased productive capacity and competitiveness.
To them, currencies are simply a means to an end, and not an end in themselves. Zimbabweans, too, must understand that our premium-rated currency provides greater opportunities to procure critical raw materials and develop our internal capacity to produce and export.
Overall, what we have lost from a strong currency, we can gain from broader markets. We must also note with satisfaction that imported products have not become cheaper than locally produced commodities in terms of purchasing power parity (PPP), which must be a boon for local companies.
In fact, the outcry over Coca Cola shortages shows that the imported option for the same drink has not come easy. Given the strength of the bond note against the rand, it should not be a challenge to opt for the imported one, if one could afford.
Encouragingly, we have come to realise that the local product is cheaper.
The influx of imported products that was envisaged, especially after the suspension of import restrictions on select products, has not happened.
Economics has emerged as the biggest winner. Equally, Zimbabwean products that had no market only four months ago, now have ready markets outside our borders because of soaring demand.
The country has internally devalued and significantly enhanced competitiveness. There is an opportunity in our current troubles and authorities must never be tempted to sway and create conditions where these imports are better priced than local products.
This problem is a Godsent opportunity to turn around the economy.
If you think of it, the shortage of Coca Cola is actually a demonstration that if local beverage company Delta gets its act right, both local and even export markets are theirs for the taking.
The question then is: what must we do to ensure our local producers exploit the evident gaps?
Put differently, instead of listening to consumerist-minded crybabies, what is it that we must do to direct our businesses to abundant opportunities as well as change the negative mindset?
While the fiscal side appears to be slowly creeping back to doing things right, there is need to urgently direct foreign currency to only those companies that have higher local content.
What would it take if the RBZ would support only companies with an import substitution road map? What would it also take to gradually reduce the country’s import bill by allowing those that have the capacity to import their own fuel?
What would it take to redirect foreign currency from the fuel sector to productive sectors of the economy such as manufacturing and agriculture?
We also need to tell the Zimbabwean story better. At the heart of all the noise is a frustration that the Zimbabwean dream has gone down the drain.
Rather than see the rainbow, and the advances being made on many fronts, many have dug themselves into collective mourning. Sadly, our culture industry, especially the Zimbabwean Broadcasting Corporation, for one reason or the other, has miserably failed to align its storytelling capacity in ways that transform the national mindset.
Instead, doomsday leaders on social media and other communication platforms seem to be the ones directing the national mood. In all markets that have done well, significant investments have gone into the culture industry.
The USA, UK and even Iran have taken time to position the communication sector at the centre of development.
In Zimbabwe, we believe their role is peripheral. We must make 2019 a year where we change the collective mindset because things are not as bad as they can potentially be.
However, if we continue pressing the self-destruct button as we seem to be doing by investing and generating a lot of negative energy, we will wake up to realise we missed a glorious opportunity to prosper.
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