Vision 2030
Allen Choruma
Innovative ways that improve the ease of doing business, for example, will also have a “pull effect” in attracting both foreign and domestic investment.
By now it should be crystal clear that the “Zimbabwe we want” will not be realised by extending begging bowls for aid to our traditional Western multilateral development partners and donors.
Instead, Zimbabweans should look inwards and come up with home-grown disruptive and innovative solutions that leverage on what the country already has — its people, human capital, land, natural resources — and use that as a foundation to spur growth and prosperity.
No matter how “well-dressed and rehearsed” Zimbabwe can appear before international multilateral financial institutions, events over the last few months (and years) have shown that Zimbabwe can never win their hearts.
There are always fleeting new conditions at every turn.
Goal posts are shifted time and again.
This makes our repeated trips to Washington, London, Paris, Brussels — the capitals of western capitalism — a wild goose chase.
To prove my point, Finance and Economic Development Minister Professor Mthuli Ncube has just returned from Washington empty-handed.
As he headed for Washington in March, US President Donald Trump, on March 4 2019, issued an Executive Order 13288 on the continuation of the national emergency with respect to Zimbabwe by a year, claiming the Zimbabwe situation continues to pose an “unusual and extraordinary threat” to US foreign policy.
This comes barely seven months after President Trump renewed the Zimbabwe Democracy and Economic Recovery Act (Zidera) in August 2018.
US Office of Foreign Assets Control (OFAC) of the US Department of the Treasury administers and enforces economic and trade sanctions.
Zidera denies Zimbabwe access to US markets as well as benefits from AGOA (African Growth and Opportunity Act), an Act which was promulgated by US Congress in 2000 to promote trade between African countries and the US.
The European Union (EU) on February 19, 2019 also extended sanctions on Zimbabwe by another year.
EU and US sanctions block Zimbabwe from accessing international development finance, be it by the International Monetary Fund (IMF), World Bank and other multilateral development institutions such as Organisation for Economic Co-operation and Development (OECD), including Development Assistance Committee (DAC) countries, often referred to as the major donor countries.
Time and again, our traditional Western development partners have expressed interest to support Zimbabwe arrears clearance road map, but they have not made commitments to extend new lines of credit or offer debt relief; thus, keeping us in a perpetual debt trap.
Zimbabwe still remains saddled with a huge foreign debt of US$8,1 billion.
Given the above background, it is, therefore, not surprising that, apart from shaking hands and photo shoots with the IMF boss Christine Lagarde, nothing much was expected to come from the Finance Minister’s trip to Washington this month.
So what lessons can be learnt from all this?
Does this mean that Zimbabwe should divorce itself from the international financial system?
Should Zimbabwe continue extending begging bowls to the IMF, World Bank and DAC countries?
What can Zimbabwe do differently to achieve growth and prosperity?
What the above exposes is that as a nation, while we cannot divorce ourselves from the global financial architecture, we cannot at the same time continue to knock on the doors of traditional Western development partners when each time we do so, the doors are not opened.
Alternative development partners
We should move away from traditional means of securing development finance.
We need new partnerships, new ways of doing business and win-win deals that benefit us.
Zimbabwe should widen its options.
Western countries generally have double standards for Africa and often use development finance to serve their political and economic interests.
Western development aid approach in Africa is now considered outdated.
Zimbabwe should start looking at alternative development partners such as BRICS (Brazil, India, Russia and China and South Africa).
BRICS, through the New Development Bank (NDB), offers development aid alternatives to developing countries.
Zimbabwe should also strengthen its bilateral relations with other African countries.
Suffice to say, Bi-National summits are very important.
Instructively, in February Gaborone and Harare signed six bilateral agreements.
Similar agreements with South Africa — our biggest trading partner — are now more than 45.
Our efforts should not end there.
The African Continental Free Trade Area (CFTA) launched on March 21 2018 is set to improve intra-African trade.
However, it is only innovative African countries that will benefit from this trade bloc — which will become the world’s biggest — integrating 55 countries with 1,2 billion people and a combined GDP (gross domestic product) of US$3 trillion.
Innovation
Aid cannot create the Zimbabwe we want.
It can only be built primarily by our own people and resources.
Innovation can bring about change in a relatively short period of time and even in outstandingly difficult circumstances.
It can help us leverage on our abundant natural and people resources and use them to our advantage in developing an inclusive economic system that benefits all Zimbabweans.
We have seen how disruptive technologies such as blockchain, digital and artificial intelligence have changed the face of global financial services.
Similarly, innovation will allow us to change the face of our great country.
As Brett Chulu, a Zimbabwean researcher and management consultant puts it, disruptive innovation changes the accepted traditional models of economic development.
Innovation has a “pull-in effect”, meaning that if we come up with innovative economic ideas, the necessary infrastructure and supporting economic networks and investments will flow into the country.
In other words, innovation in all sectors of the economy (mining, agriculture, energy, health, ICT, tourism) creates opportunities and attracts (pulls) investments and, thus, has a significant impact on development outcomes.
Innovative ways that improve the ease of doing business, for example, will also have a “pull effect” in attracting both foreign and domestic investment.
History is full of examples of innovative countries that have looked inwards and used whatever resources at their disposal to spur development.
We have seen the “pull effect” work in China, Singapore and United Arab Emirates, to mention a few countries.
Resources
Zimbabwe’s abundant natural and mineral resources have not changed our economic situation drastically because we have not been innovative enough to make these resources work to our benefit.
Instead, we have perpetuated colonial models that condemned us to the extractive sector, where miners have been concentrating on exporting low-value primary products. This model exports jobs and factories to Europe and the US.
We need to think afresh and come up with innovative ideas, plans and models that disrupt these inherited colonial legacies and old economic models.
Corruption has made things even worse for us.
The Zimbabwe we want cannot be built if we do not get rid of this cancer.
The scourge is now considered to be one of the major threats to socio-economic transformation and sustainable development.
Beneficiation
We need to think strategically and come up with innovative methods to add value to various sectors of the economy.
It will enable us to create quality finished products, open factories and create thousands of jobs for our youths at home and bring an end to high unemployment rates.
As a country, we have talked about this countless times. All that is needed is strong political will to drive the process.
We need to come up with a robust beneficiation policy in the same way South Africa has done.
Botswana sorts and polishes its own diamonds through Debswana Diamond Company, which is 51 percent owned by the Botswana government, while De Beers holds the remaining stake.
In fact, De Beers has since moved its diamond sorting and trading division from London to Gaborone in an effort to stimulate the domestic diamond industry, including numerous downstream service industries.
Zimbabwe should also look at other innovative strategies to enable the country to derive more value from minerals.
These innovations include barter deals, futures, swaps and tying commodities to infrastructure development.
For example, in 2018 Ghana signed a US$2 billion swap agreement with China through which parties made a commitment to develop an integrated bauxite industry infrastructure that would allow Ghana to produce finished aluminium products and export them back to China as payback for the loan.
The integrated bauxite industry in Ghana enabled the country to develop its infrastructure and set up industries at home; thus, creating jobs and reducing the levels of unemployment and poverty.
Fiscal Discipline
Government also needs to be disciplined.
For example, Government’s spending appetite should be managed because fiscal indiscipline threatens economic stability and recovery.
Fiscal discipline should always take precedence over political expediency.
A law that puts a ceiling for the budget deficit, say 3-5 percent of GDP, so that Government can be held accountable and its appetite for unbudgeted expenditure brought in check.
Without such tough fiscal measures, well-intentioned economic reforms will not bear fruit.
Inclusive economy
Further, the Zimbabwe we want can be achieved through creating an inclusive economy.
We need to transform the entire economic system and patterns of ownership of wealth in order to create broad-based inclusive economy that benefits all Zimbabweans.
Through innovation, entrepreneurship, discipline, hard work, national cohesion and a selfless and dedicated visionary leadership, we can create the Zimbabwe we want.
Allen Choruma can be contacted on e- mail: hoziadvisory2018@gmail.com