OPEN ECONOMY: Charting our own competitive course

28 Sep, 2014 - 06:09 0 Views

The Sunday Mail

Europe is seven years into recession. Italy and Greece have hit up to 42 percent and 56 percent youth unemployment rates, respectively.

Just last year, non-performing loans and defaults on the continent reached 1,2 trillion euros.

Political uncertainty exists in Scotland and Catalonia in Spain; both scenarios posing problems of secession from economic union. Political risk is evident as the European Union struggles to achieve economic integration with unsettled Ukraine and Turkey. Adding to the EU’s woes, member countries like Ireland and Portugal face sovereign debt of above 120 percent of GDP. The problems Europe faces are severe. This is not to gloat or to be perceived as engaging in antagonist indulgence in European economic hardships. Instead, the proven fact here is that we are not the only ones in the midst of economic struggle.

Actually, much of the world is. Global trends are changing and economic structures need the accommodating adjustments. But no one has shown to have the answers. The truth is that today, there is no comparative advantage to the uncertainties of globalisation as it relates to economic growth. There is no proven formula to economic prosperity.

Nobody can say that Europe has a better grasp or insight into the fate of the global economy. Let alone the fate of economic territories with the gift of free will and independent discretion; territories such as Zimbabwe.

Don’t we stand firm that we will never be a colony again?

So then perhaps it is high time we shifted our mindset towards sovereign economic thinking. It would be sad irony that after claiming this economy as our own, we then ask for instructions on what to do with it.

In such an unfortunate case where we succumb to timid instincts and decide to follow European or IMF guidance, I guarantee that we will be pointed towards the same unproven reforms and policies Europeans have been trying for themselves; evidently with little successful outcomes.

Besides that, surely Western reforms and policies are impractical to our cultural, social and political being. I cannot be convinced that what works in their environment would necessarily be a custom fit in ours.

More cynical commentators would suggest that Western reforms would be meant to liberalise our economy to extents that expose us to further imperialist opportunities that serve greater benefit to Western economic interests than our own.

I suppose even that notion is yet to be disproved. The point is not to say that we must immediately disqualify all Western suggestions or limit our interaction with Western governance and institutions. Some reforms may indeed be correct and information exchange is something we can always benefit from.

Understand that I am not saying we should not engage the IMF and Europe to seek investment. My overall point of emphasis is that we need to change our mindset from the one we have become accustomed to having when we engage with them. We really need to!

I consistently stress that many countries today, under the impression that they are confined within Western economic hegemony, simply feel that way because of their failure to conceptualise their own economic course. We share this similar fault.

Instead of seeking instruction and guidance, we need to take responsibility in defining and understanding what our own economic advancement should be. We should chart our own path to economic prosperity. Only then can we approach other hemispheres with opportunities for them to invest. Opportunities crafted in our own vision.

The fundamentals of a country’s economic agenda requiring finance are similar to that of a proprietor’s business plan. It is about articulating your own vision, your own competence, and your own strategy. Ultimately presenting a convincing case that investing in your chosen path will be profitable for the investor. The best mapped out business plan, or economic agenda in our case, empowers one to ask the potential investor, “Are you in or out?” in a cordial manner, of course.

No reason to be timid, or allow desperation.

Capital markets are full of money ready to invest. Last year alone, European companies added US$50 billion to their already existing US$1 trillion cash pile simply on the basis that there are no growth prospects incentivising them to invest in Europe. Global cash reserves are at US$3,5 trillion; that is 75 percent higher than they were before 2008. As I mentioned, non-performing loans in Europe are high and alternative investment markets are in demand. Sure, political tensions and sanctions limit us from engaging private institutional money. But European politicians are aware that their political parties do not feed their citizens, it is their corporations and industries that do.

If we can truly show that there is money to be made, political interference will subdue. I do believe that our existing US$7 billion debt is a sunk cost. It is held on our heads more as political leverage than it is a pressing arrear.

As long as we can show that we can start making money in the future and sustain economic growth, investment will come. Are we willing to chart our own course that is competitive? I would imagine that such a course would require cohesion between our political, governmental and industrial strata, all the way to our common citizenry; who, in ideal economic circumstance, would be the drivers of economic growth. The challenge is there.

The world is moving. Shall Zimbabweans actively compete in globalisation or dawdle in the doldrums of economic hegemony?

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