The Sunday Mail
Chris Chenga Open Economy
Consumer satisfaction is the cornerstone of market economies. Satisfaction is the fundamental impulse which inspires competition from market agents. In a market economy, countless agents exert their best efforts in determined contestation to offer products or services that satisfy consumers.
When product or service attributes such as design, durability, price, quality, and efficiency are all left open to intense but fair competition, the ultimate achievement of a market economy becomes a sustained high standard of consumer satisfaction! Conversely, by compromising these very same product or service attributes, the standard of consumer satisfaction in a country is bound to fall.
Thus, an existential question of economic system is posed when considering our Buy Zimbabwe philosophy.
What priority level does Buy Zimbabwe assign to consumer satisfaction?
If Buy Zimbabwe places a high priority to consumer satisfaction, then indeed its philosophy would be grounded on an inseparable reverence of the competition inspired by market economies!
Buy Zimbabwe would be a structural enforcer of the competitive spirit of a vibrant market economy.
Regrettably, this context of a competitive market system fails to find familiarity to Buy Zimbabwe.
Instead, prolonged compromise on competition by market agents is the recurring theme in Buy Zimbabwe interventions. Consider our affinity to import controls such as tariffs, quotas, or limited licences.
Granted, import controls are not necessarily undesirable economic instruments; it is our frequency to resort to import controls which suggests an overly extended compromise on market competitiveness.
At some point after local products or services have failed to beat out foreign competition, perhaps it is the standard of local competition itself that requires scrutiny.
Why do we always have to go back to import controls?
If we are a market economy that sanctifies consumer satisfaction, why then are our consumers deriving greater satisfaction from the products or services foreign market agents and not local ones?
These questions demand an analysis of the factors of competitiveness that dictate local market agents’ ability to offer products or services that satisfy consumer preferences.
On that premise, I will proffer two scenarios in which Buy Zimbabwe should investigate in as far as understanding why local market agents struggle to maintain a high standard of consumer satisfaction.
Firstly, we have become familiar with the phrase “industry needs to re-tool and we need FDI (greenfield investment) urgently”. Our industrialists complain of a lack of equipment and factory assets.
They say industry has poor infrastructure and cannot compete with imports. Well, immediately after dollarisation Zimbabwe’s GDP shot up from US$4 billion in 2008 to US$14 billion in 2013.
This is widely acknowledged as results of a heavy wave of capital inflows into the country.
Interestingly, in his maiden monetary policy statement in August 2014, Reserve Bank of Zimbabwe Governor Dr John Mangudya asserted that a lot of debt burdening industry at that time was due to funding mismatches, where “a dollar euphoric” industry borrowed to finance long term assets (equipment) on short term loans.
A lot of industrialists through interest groups and business associations hurried to stand by this assertion, using this funding mismatch narrative to lobby for debt relief and sustained financing.
If we reconcile this series of events over time, then what we have today in 2016 is our industrialists telling us that they are uncompetitive to foreign imports due to having archaic equipment in factories.
Yet, in 2014 these same industrialists were lobbying for debt relief because they borrowed heavily soon after dollarisation to purchase new equipment and long terms assets.
Buy Zimbabwe should investigate the availability and utilisation of capital investment by local market agents over the last eight years (2008-2016).
It would be unfair on the consumer to grant protectionist measures before providing clarity on whether or not such favouritism is deserved by our industrialists’ financial judgment, or lack thereof.
Evidently, one can reasonably suspect that poor local competitiveness today is in fact largely due to a self-induced investment gap which local industry is not being forthright.
Financing post dollarisation, or during the euphoria stage, was not invested in equipment to enhance the desirability of our products or services.
Instead the capital inflows to industry were dedicated to executive remunerations, perks, and other corporate expenditures that did not enhance the competitiveness of the products or services offered by our market agents.
Secondly, protectionist measures cannot be justified in any scenario where an economy retains structural inefficiencies that hinder competitiveness of its products or services.
Our industry is very dependent on operational infrastructure provided by highly inefficient public entity providers of energy, water and interconnectivity infrastructure such as road, rail and air.
A significant part of these inefficiencies are costs inherited from corruption, mismanagement, and economic sabotage.
The Africa Development Bank estimates that Zimbabwe incurs up to US$1 billion a year from structural inefficiencies, a cost passed onto local consumers either as a monetary cost or compromise to the condition of product or service delivery.
This corroborates with consistent reports from the Auditor General on state enterprise and public entities.
Just last week, the Comptroller and Auditor-General yet again released reports that exposed countless incidents of bad practice and misappropriation of finances.
Therefore, uncompetitive local products or services are a direct result of a poorly regulated and public serviced market economy.
The consumer effects of corruption, mismanagement and theft is that consumer preferences shift towards foreign products or services of better regulated and serviced economies.
Imports are more desirable because their value chains are not inflated by bad practices.
From these two scenarios, what becomes apparent is that Buy Zimbabwe is incorrect in chastising the preferences of local consumers who choose to purchase foreign products or services over local ones.
Buy Zimbabwe is actually at fault for depriving consumers of a higher standard of consumer satisfaction through import controls because it is the retained uncompetitive inefficiency, mismanagement, and corruption found in both local industry and public entities which have decreased the standard of consumer satisfaction in our local products or services.
These are not attributable to the consumers.
Yet, we are insisting that consumers accept this depressed standard of consumer satisfaction within an abused context of economic patriotism.
It is shallow rhetoric to justify imposing import controls and limiting the product or service choice to local consumers, whilst we complicitly allow our local market economy to falter.
Buy Zimbabwe should be a structural enforcer of the competitive spirit of a vibrant market economy.
This would entail interrogating the competitive deficiencies that are causing local products or services to fail to sustain providing a high level of consumer satisfaction.
Buy Zimbabwe should be an appeal to elevated competitiveness by our local market agents and the public entities which regulate them; not to compromise in a manner that appeases market inefficiencies.
When local brands sustain a high standard of consumer satisfaction, that is a source of national economic pride.
