OPEN ECONOMY: When urgencies of today cloud the future

22 Mar, 2015 - 00:03 0 Views

The Sunday Mail

Across the continent, what seems to be justifiable short-sightedness often hinders long- term desirables. A focused lens on our immediate necessity clouds our vision for the future.

Seven years ago I took my first Finance & Investment class at university. The tradition at the institution that I went to involved students signing up for a class, attending the first lecture, and depending on their impression of the professor, a decision would be made on whether to stay in that class or not.

Well informed on this practice, my professor knew that he had to push a hard sell immediately to retain students.

“Would you invest US$100 000 with me today, if I could almost double that figure by the end of seven years? Close to 100 percent return within the decade!” he said abruptly, hoping to appeal to our monetary self-interests.

He presented an investment plan that asked for US$100 000 at a 10 percent rate of return. Consensus across the classroom was that this man was crazy.

Assuming we had that money to set aside, 19-year-olds still had no business saving that kind of money at that age. Plenty of living had to be done; spending had a direct relation to the satisfaction of one’s youth. Besides, concern for the distant future did not befit our stage in life.

I am not sure that I can still be as dismissive today.

In hindsight, the professor was onto something. Perhaps my peers and I, through misguided group think, passed on a more rewarding future by adapting to what seemed the concerns of the time.

This quandary is comparable to a fundamental challenge faced by most African countries.

Across the continent, what seems to be justifiable short-sightedness often hinders long-term desirables. A focused lens on our immediate necessity clouds our vision for the future.

By future, I am referring to generational long term; measuring time in progeny.

In Zimbabwe, for instance, economic short-termism is a common trait. The pressures of high unemployment, lowering standards of living, and uncertainty of subsistence, makes a long-term view of personal and national economics that much harder; maybe even irrelevant to the majority.

This is definitely understandable.

But as a country of over 10 million, surely there are some millions of us who can hold on to visionary concern. It must be a national duty for some of us to visualise a long-term economic “utopia” for Zimbabwe.

Unfortunately, I am yet to see noticeable representation working on crafting that existence. From academia, politicians, business leaders and youths in school or just graduating, I would like to challenge these groups to step forward and think well ahead of our time.

What makes me comfortable in making such a generalisation on economic short-sightedness?

Well, pre-dominant mindsets show that we lack distant foresight in our economic solutions and how we pursue development.

First, Zimbabwe is a debtor nation.

Our national history gave us no way of avoiding this circumstance. However, there is a deficiency in how we study the best means of resolving this undesirable existence. We have little disquisition —beyond that of our immediate debt obligations to foreign institutions — on how being a debtor nation hinders economic self-determination.

More overlooked is why creditors would have greater interest in us being a foreign capital dependent country than a self-sufficient financier.

Developed nations export their citizens’ surplus savings, while a country like Zimbabwe is forced to export its income to service foreign debt. This has the implication of short-changing our own potential self-sufficient finance in the future.

More precisely, the billions we owe to foreign institutions are actually savings from their citizens’ incomes, which grow interest over time that is to be paid by a debtor like us. Good for them. Meanwhile, the income we make here, we have no time to invest it because it is immediately funnelled towards servicing debt.

We derive little long-term benefit from today’s earnings.

Such a debt cycle, if not recreated, will remain until the end of days. These are the dynamics we risk leaving to our children. We must apply our minds towards how best to clear our arrears and become a nation able to invest its income towards future economic development. That is economic sovereignty!

Second, the truth about the Zimbabwean economy is that it is largely an adopted economy. This is in reference to planning and design. Most of our strategic industries and functional infrastructure, as well as the corresponding institutional structures, were designed before 1980.

It is very hard to view resuscitating an adopted economy as visionary economic thinking. For instance, when we talk about revitalising strategic industries, was their strategic conception of our own economic planning, and have we reassessed if those sectors will still be strategic in the future?

Otherwise, it is time to create new industrial mainstays that cater to modern means of production and give us competitive advantages for generations to come.

It would be unfortunate if we focused on recapitalising old industry for short-term economic growth, instead of restructuring our economy towards new industry which is competitive in the long term.

Visionary economic thinking begins from economic planning and design, and not simply from reconstruction of structures of the past.

Interestingly, Finance and Economic Development Minister Patrick Chinamasa once said that our economy has too many managers, and not enough creators and visionaries.

I agree with this assessment.

We approach our economy with theoretical obedience; little manifestation of ideas conceived from the legitimacy of our own reality. We have exceptional talents at being given a form of reality and managing its sustained existence.

Regrettably, these are unwanted talents for a self-determinant Zimbabwe and only serve to maintain the status quo of an old economy.

They do not lead to a creation of a Zimbabwe, which will own substantial equity shareholding in the African Development Bank. Nor do they create a nation with ability to find cures for Ebola, fight cholera and be self-sufficient in anti-retroviral production.

Future generations will not have such a Zimbabwe, as long as we do not think beyond today’s constraints.

Anyhow, I drew parallels on how long-term investing is removed from the concerns of young adults, similar to how long-term economic thinking is removed from Zimbabwe. Some of us may recall when Tourism and Hospitality Industry Minister Walter Mzembi suggested we host World Cup 2034; the nation was just as dismissive as my peers and I were of my professor’s investment plan.

I worry that as we try to live through the urgencies of today, we risk short-changing a more lucrative future for our progeny. As for Professor Ahmed, he contacted me a few weeks ago. By year-end, he will make a cool US$95 000 return on his US$100 000 investment. He intends to put it in a trust fund for his grandchildren.

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