The Sunday Mail
Howdy folks! If you are reading this column, then you made it into 2016. Congratulations!
My paternal grandmother – Mbuya vaDototo – aIso made it, albeit not for long. She got promoted into glory the very morning of the beginning of the year, as the fireworks were dying.
As you read this, we are laying her to rest while singing, “Will the circle be unbroken, by and by Lord . . . ”
Mbuya is now resting from her circa 100 years of purposeful work on earth.
But having confided that with you, I now feel relieved to get on my horse and run my own race, and how about we ride along the lines of opportunities and threats likely to rain in our economy this year.
How about we spotlight some of them while also looking at how best to maximise the envisaged opportunities and ameliorate the threats. I am inclined to open this discourse with the invigoration of the yuan currency in our economy.
A fortnight ago, both the treasury and central bank governors informed us that this year, the Chinese currency would not only exist in principle, but in practise in our economy.
You may recall that I argued here in my article titled “Yearning for the Yuan” published about three months ago that “recent developments in China call for a serious rethink of our current currency preferences.”
I also proffered in the same article that those developments “should really compel us to examine the role that the Yuan can play in the economic transformation of our country”.
I also condemned the “sickening dominance” of the US dollar, which has also been gaining value much to the suffocation of our exports – which are our top source of liquidity.
How do you then maximise exports when the dominant currency is vigorously militating against such efforts. I don’t have to repeat that entire article here but l can urge Chinese businesspeople in the country, especially those in retailing, to be at the forefront in supporting Government in implementing this indispensible move.
I support Dr Mangundya’s wisdom in saying that we need to enhance our production and trade with China in order to make the yuan relevant in our economic matrix.
But what I am against is his assertion that we should increase our volume of exports in commodities like tobacco and others to China. We should not do that!
Our top ten exports to China already are raw materials while our top imports from the same are finished goods.
That kind of trade is unsustainable and an ideal trade increase between the two countries, earmarked to invigorate the yuan in our country, is that which increases our export of finished products – in line with existing policies such as the National Trade Policy, Industrialisation Development Policy and Zim-Asset.
If more than 90 percent of our cotton is currently exported in its raw state, should we increase that statistic to 100 percent, just to make sure that we increase our trade with China? In the same vein, I am also not convinced by Minister Chinamasa’s argument that since gold prices are projected to fall this year, we should increase production of this finite resource so that we can earn the same amount we earned when prices were up there.
Rather we should change our identity from being price takers to be price setters. It is this new identity that can turn around the fortunes of our economy.
The year risk constraining its potential by economic saboteurs who are bent on spreading lies and half truths about certain things that can cause panic and melancholy in the economy.
Take, for instance, a false message recently circulated on social media. The message claimed that Government would immediately discontinue the use of the US dollar and instantly reintroduce the local currency, with civil servants said to start receiving their salaries in local currency.
The message was gullibly received by many and it’s a pity how they may proceed to make decisions based on that, like withdrawing their non-transitory savings.
If this calibre of savings is withdrawn on a wide scale, it will affect loan accessibility and interest rates. Spreading messages that create erroneous sentiments and impressions is therefore akin to selling out.
People like Morris Nyathi sold out in the liberation struggle, resulting in the death of thousands of lives at Nyadzonia.
The rate at which lies are being peddled in Zimbabwe on social media, ironically by Zimbabweans themselves, show that the problem might persist this year, much to the disadvantage of our economy.
We need to be ambassadors of hope, not despondency. Let us always be wary of what we say in all our interactions, even on WhatsApp groups where we interact with people from other nations.
Why all the negativity and lies, as if there is nothing good to tell?
This country needs more biblical Joshuas and Calebs who don’t only see giants and barriers in their reports about the land of promise but can also see milk and honey.
Let us learn to tame our tongues for the greater good of our nation.
The Bible tells us that, “The tongue is a fire, a world of iniquity” (James 3:6).
This country needs hope, we should all spread the sweet fragrance of hope.
Even the Confederation of Zimbabwe Industries made a resolution at their 2015 to “communicate messages of hope.”
Then the projected fall in oil prices on the international market is something to smile about, if fairly transmitted to the local market, it will bring efficiency to the entire economy. The sad thing is that many are only interested in passing to the consumer costs incurred, and not benefits accrued. Surely, a fall in the price of fuel from US$96,20 per barrel in 2014 to the projected US$51,40 per barrel in 2016 should leave us low fuel prices.
In the face of the current rainfall season where we have already been told that we are going to receive below normal rains, it is going to be very difficult to grow crops that rely on rainfall only.
We therefore need to rely on irrigation as well. lt is commendable that Zimbabwe National Water Authority has significantly reduced water utilities for farmers.
That, coupled with the reduction in fertiliser prices, should give farmers the impetus to return to the fields. All these maize imports will be a thing of the past if we take irrigation seriously and utilise the fall in water utilities to expand our hecterage under irrigation.
Just imagine if we are to plant only 320 000 hectares of maize under irrigation, with each hectare yielding at least five tonnes.
We would be able to attain our national grain requirement of 1,6 million tonnes. We are blessed with countless water bodies countrywide.
The falling rand will also continue to pose a serious threat to our economy as it is promoting massive importation of cheaper goods from South Africa. These are competing with local ones.
Protection won’t do much to checkmate this problem, given the porous state of our borders and how we tend to have more illegal borders than legal ones on this country.
If Government fails to take decisive action on this matter, our local industry will continue to shrink – which is counterproductive, in the grand scheme of things.
Then we have another downside that is going to arise from the pressure of the power price increase.
Understandably, as we have heard, we need to cater for additional emergency power imports from regional utilities and emergency diesel power plants.
But hydroelectricity production at Kariba is the cheapest way of generating power as compared to these emergency contingencies.
This is why I think a relative increase in power tariff will be an ideal short term measure to foster enough power supply for our different economic activities.
This may translate to increased production costs for companies and high costs of living for residents, but could it be worse than the opportunity cost of going without power for 18 hours a daily – when industry, ironically, requires 18 hours of uninterrupted power daily?
Again, we all resort to something when there is no electricity – some households buy firewood for their heating and warming requirements, while some industries use generators. ln most of those contingency scenarios, you have to incur more than a relative increase in power tariffs.
The choice is ours to make. But it is the increase on road traffic fines that will cause disorder in the roads and may not achieve the intended purpose.
Granted, we need to promote road safety and discipline on the road. But do we have to do that by increasing traffic fines by 500 percent?
The Finance and Economic Development Minister Patrick Chinamasa argued that our traffic fines are generally lower compared to those obtaining in the region.
That may be right, but another right is that our income levels are lower and the issue of affordability should be balanced with the need to foster discipline and safety. Otherwise, it may only lead to more corruption as he who can’t afford to pay US$100 can get away with bribing US$20.
Otherwise, some of the indiscipline reigning in our roads is motivated by the poor state of our roads – pot holes, no markings and so forth. So taking good care of our roads should also be a priority. When we look at the bigger picture, some of the traffic offenses attracting a fine are actually not promoting safety.
No amount of money is ever enough to fine someone who is driving without a licence, putting the lives others in danger.
A US$100 fine would be akin to giving them a licence to kill. Last time I checked, only James Bond and a few others had that licence. An ideal alternative to deal with those driving without licenses is just to imprison them or ban them from driving for life.
Meanwhile, CZI’s Mr Busisa Moyo called for salaries to be cut by 50 percent.
What the CZI boss forgot is that workers are the consumers of the very products they produce. Cutting wages by half is akin to cutting their spending power by half, and cutting their demand for locally produced goods by just as much.
What is ironic is that industrialists are the ones who cited low domestic demand as one of the major constraints to capacity utilisation.
Cutting salaries by half will therefore only lead to a fall in capacity utilisation. ls that what CZI wants?
Industrialists should go back to the drawing board and find more innovative ways of attaining competitiveness.
I know some may argue and say that if wages are cut down to foster industrial competitiveness, the fall in salaries will be compensated by reduced prices so that the worker can return to his initial real consumption levels.
That’s a simplistic argument, given the convenient presence of substitutes in cheaper imports that can be switched to.
And protection won’t do much to stop that from happening, given how porous our borders are. But we can always talked in detail about that another day.
Later folks!
