From a vicious to a virtuous cycle

About a year ago, President Emmerson Mnangagwa’s newly-minted Government embarked on the onerous task of laying the foundation for establishment of what we now commonly refer to as the Second Republic.

The reasons why the First Republic ultimately imploded are clear.

A stark disregard for economic fundamentals; the entrenchment of unproductive self-entitlement that itself bred an unwieldy, unresponsive and corrupt bureaucracy; the emergence of a toxic political clique that acted with impunity and crass arrogance; and a culture of indolence were among the most apparent viruses that felled the First Republic.

It was from these ashes that President Mnangagwa has had to coax a phoenix.

To assist him in that mission. His Government — in its very early days — asked the African Development Bank to conduct an economic study of Zimbabwe to render advice on how best to structure the Second Republic’s quest to establish an upper middle-income economy by 2030.

The outcome of that request is the compact but fecund report titled “Building a New Zimbabwe: Targeted policies for growth and job creation”, which President Mnangagwa makes reference to in this week’s instalment of his column in The Sunday Mail. The lead author, AfDB acting director (Country Economics Department) Ferdinand Bakoup, is quite optimistic about Zimbabwe’s growth prospects.

The country’s main assets, the report notes, are a “generous endowment of natural resources, existing stock of public infrastructure, and comparatively skilled labour force”.

To unlock the potential inherent in these assets, the AfDB suggests a three-pronged short to medium-term strategy hinged on agriculture, eco-tourism and special economic zones. It sounds pretty simple, because it is. We have to start with the basics and build from there in subsequent national development plans.

For the first “prong”, headway has already been made by way of Command Agriculture, and it is significant that the 2019 National Budget proposes to allocate $989,3 million for inputs, irrigation development, mechanisation and other related areas. Zimbabwe is on the right track in terms of agricultural output. The next phase of investment should be in agro-processing and markets development.

It is something that Ethiopia has learnt well, and something we should learn.

At the turn of the millennium, Ethiopia was classified as the second-poorest country in the world, but the AfDB anticipates it will attain middle-income status by 2025 on the back of agriculture-led industrialisation.

That country focused on increased output and increased value addition. Then they invested much financial and political capital in developing East Asian, Middle Eastern and European Union market access. If Ethiopia did it, we can also “did it”.

We have seen that we can increase production, so now we need to diversify that output, process it, and send it to markets that will pay in foreign currency.

On the second “prong” of eco-tourism, we have not seen enough from Government and the private sector in terms of developing destinations, improving access to them, and marketing them to the world.

Much of the development burden in this area lies in the hands of the private sector.

Government’s important role on this front is facilitation and creation of an environment that allows private investment to thrive in eco-tourism.

Innovation must be allowed to thrive. Innovation must be encouraged. Public-private and private-private partnerships must be forged.

Surely, it should not be that difficult to market a destination like Zimbabwe for eco-tourism, which is essentially tourism directed at the natural environment and its wildlife. But this must be done in a way that the money comes to Zimbabwe; not this business of tourists paying for their entire packages in Europe or North America to European or North American agents who have European or North American bank accounts.

On the third “prong”, that of special economic zones, as with agriculture, Zimbabwe has made significant headway already.

SEZs have been designated and more shall be designated as the investment environment improves.

The 2019 National Budget does well to facilitate operationalisation of the Zimbabwe Investment and Development Agency.

What Government and the private sector need to do is identify priority areas in which Zimbabwe has comparative advantage for local manufacturing with an eye on export markets.

The AfDB report notes that “Government should pay attention to spontaneous self-discovery by private enterprises and support the scaling up of successful private innovation in new industries”.

It continues: “Rapid technological change may give rise to new opportunities that would not have existed a decade or two earlier in the rapidly growing comparator countries. Examples include mobile phones and related e-services, social media, and green technologies.”

That is what SEZs should be all about.

Zimbabwe is not going to develop by being a net exporter of unprocessed agricultural or mining output, by relying on individual foreigners to stumble upon us as an eco-tourism destination, or by continuing to manufacture the goods that have limited international market appeal.

We must identify the areas in agriculture, tourism and manufacturing in which we have a comparative advantage.

In a couple of decades, China leveraged on its human and natural resource bases and transformed into a viable economic concern. Again, if China did it, we can also “did it”. By unleashing our human capital and natural resources, combining those with honest, hard work, while engaging and re-engaging with the international community, Zimbabwe can break out of the vicious cycle of poverty and break into a virtuous cycle of strong, sustainable and shared development.