The Sunday Mail
Is Zimbabwe in real financial crisis as the common narrative suggests, or are we just a nation that is failing to manage its appetite for the finer things in life?
This was the question asked by some curious investors at the just-ended Mining Indaba in Cape Town, South Africa.
The question was not just rhetorical. It was based on an analysis of economic data.
In 2018, Zimbabwe earned $5,6 billion in foreign currency. Of the amount, $3,4 billion was from the mining sector and close to $1 billion from tobacco alone.
In contrast, the manufacturing sector received $1,2 billion from the Reserve Bank of Zimbabwe (RBZ) but only managed to generate a disappointing $200 million in return.
These statistics are a clear indication of Zimbabwe’s disproportionate dependence on the manufacturing sector, which, apparently, has become a conduit for imports.
The sector, which is currently being pampered by the central bank through the 1:1 parity exchange rate, has also opened itself up to a lot of questions.
How long will subsidies continue? Should a premium rate not apply to the sector?
In return for the subsidy, what does the sector contribute?
What time-frames do importers in the manufacturing sector require to move from the current state, where it is haemorrhaging foreign currency, to one where it becomes a net foreign currency earner?
And is it not time Government demonstrates boldness by doing away with current subsidies?
In any case, at the premium RTGS rate of 3:1 to the US dollar, Zimbabwe has arguably the strongest currency on the continent.
In fact, at the current rate, the local surrogate currency, is stronger than the Chinese Yuan and Japanese Yen.
So doing away with subsidies will only hurt those companies whose business models have not changed with the times.
A proper business will survive and still import required raw materials.
Most importantly, businesses will be compelled to produce locally in order to survive.
It is becoming increasingly difficult for investors to reconcile the current economic data with the challenges the country is facing.
On the import side, it seems that the country’s craving for the finer things in life hasn’t been tampered as yet because the bureaucracy has not been reformed.
The bureaucracy is seen as an interested party and, thus, has chosen to look away when all we need is to work on policies that ensure that the country succeeds in rebalancing the trade account.
How does a country in the middle of an economic revival programme afford to import goods above $7 billion, most of which are consumptive goods that can ordinarily be produced locally.
Well, it is heartening to note that the Minister of Industry and Commerce, Mangaliso Ndlovu, says the Local Content Policy (LCP) is being finalised.
Essentially, the policy is biased toward local products and designed to cut imports through import substitution.
The LCP will incentivise companies that export while also discouraging businesses that have a penchant for importing all and sundry.
Also the new procurement law — the Public Procurement and Disposal of Public Assets Act — will be tightly monitored to ensure that its provisions for supporting companies that produce locally are respected.
Sadly, as laudable as the policy is, there is growing consensus that unless the internal bureaucracy is reformed, President Emmerson Mnangagwa’s vision of an Upper Middle-Income economy by 2030 might be affected somewhat.
Similarly, although the appointment of the Presidential Advisory Council has been well-received, it is believed that there is also need to include representatives from both the mining and agriculture sector, which are key pillars of the economy.
Clearly, the President has demonstrated the desire to break away from some ruinous elements of the past.
All he needs is a team to maniacally support and push his vision.
Perhaps the starting point is to continue bringing on board strong team players and organisations who have a proven track record and demonstrable capacity to produce results.
There are talented individuals who have remained in the shadows for fear of being victimised in the same way Strive Masiyiwa was attacked when he called for the removal of sanctions against Zimbabwe.
It seems many of such individuals are now ready to step out of the shadows and step up to the plate.
Surely, there must be a way of ensuring that the President has access to these invaluable brains.
The traditional method of accessing thought leaders often means the same individuals elect themselves to sit on various boards and advisory councils.
Regrettably, this means that we remain caught up in the same policies and practices.
We also need a sustained campaign, which is led by some of the highest offices in the land, to highlight the deleterious impact of over-relying on imports.
The monthly national clean-up campaign, which is held on the first Friday of every month, has demonstrated that with sufficient political will, stakeholders can be mobilised to do the right thing.
Similar campaigns targeted at de-campaigning imports that we can do without are needed.
For example, Cape Town (South Africa), which is often rain-parched, has won accolades for running a successful programme aimed at reducing water consumption.
In 2018, the city was plunged into crisis as a result of dwindling supplies of fresh water, yet in under a year, the situation has been put under control without either augment supplies or building new dams.
The programme, which relied predominantly on demand-side management, worked because all stakeholders embraced it and understood the impact of continued misuse of the liquid.
I think we should take a similar crusade against importing.
Finally, we must not tire in our efforts to revamp our ICT systems, including information management and communication systems.
But we definitely have to invest in ensuring that we tell our story better.
Government can also do better in channelling and conveying information to local and international audiences.
In essence, the Zimbabwean Government needs to own and drive its narrative. Story telling in a globalised world is a skill that requires the participation of Zimbabwe’s best brains.
Just as well, there are many patriotic Zimbabweans who can be counted upon to do a great job.
If all ducks are lined in a row, Zimbabwe can, and will, definitely grow.
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