Reforming to Rebuild Zimbabwe: A Time For Growth
With the recent announcements of vaccines to the Covid-19 pandemic, the world is staring through their dark tunnel to get a glimpse of the light.
While the pain continues, and many still suffer, the ray of hope is on the horizon for citizens of our world, and for the global economy.
So too for the people of Zimbabwe. The Zimbabwean economy has been mired in darkness, unsuccessfully navigating stormy seas for decades. Our ship has been battered and bruised — often by forces beyond our control.
Tragically, our sails have also been ripped apart by forces closer to home: mismanagement and corruption. The resultant widespread poverty misrepresents the true potential and hope which lies within our educated people, fertile soils, and blessed lands.
Under the new dispensation we have chosen to handle the situation differently. We have chosen responsible reforms, reining in spending, tough restructuring and reorganisation. It has been a difficult period of stabilisation. But we too can now see the light on the horizon.
The Transitional Stabilisation Programme was about steadying the ship. And even with the disastrous impact of Cyclone Idai, droughts, and Covid-19, we have continued to fix those sails. Day and night. Now, we must turn the ship around.
Employment and wealth creation, national development and poverty alleviation. These are the main goals of our recently announced National Development Strategy.
The Vision 2030 was launched in September 2018 to chart Zimbabwe’s new development trajectory to achieve an “Upper Middle Income Society” by 2030, for an empowered and prosperous Zimbabwe.
The National Development Strategy aims to strengthen macroeconomic stability, characterised by low and stable inflation, as well as exchange rate stability. We will work to achieve and sustain inclusive and equitable Real GDP growth, promoting new enterprise development, employment and job creation.
We understand that there are those who cannot work, whose age or disability prevent them from integrating into a modern economy. This is why we must strengthen social infrastructure and social safety nets. It is our responsibility. It is our duty.
We will work with experts both at home and abroad to ensure sustainable environmental protection and resilience; because from our lands we must eat, from our waters we must drink, and from our air we must breathe!
But perhaps the most important current in this new wave of economic management is the commitment to good governance, accountability and transparency; this includes corporate social investment.
To modernise our economy, we are revolutionising our use of ICT and digital technology; across all industrial fields, within both the private and public sectors.
Of course, we do not act or exist in a vacuum. We are part of a global economy. And to some extent our success will depend on the pace of the global recovery from the Covid-19 pandemic, as well as international mineral prices and agriculture recovery.
However, what can be controlled must be controlled. Consolidating macroeconomic stability will be absolute vital in creating certainty and confidence in the economy by anchoring exchange rate and inflation. We must continue to curb all unbudgeted expenditures and strengthen the foreign exchange system.
Our goals can only by achieved with an empowered and emboldened private sector. We must be open and competitive, with sound macroeconomic policies anchored on fiscal discipline, monetary and financial sector stability, and a business-friendly environment which promotes both foreign and domestic investment.
We call on our friends — old and new — to be part of this transformation.
Our macroeconomic objectives for the next five years are bold, but achievable: An average annual real GDP growth rate of above five percent, while maintaining fiscal deficits averaging not more than three percent of GDP.
We must achieve and maintain single digit inflation while increasing international reserves to at least six months import cover by 2025.
Our markets must be open and attractive. Safe and secure. Competitive and liberal. We therefore look to establish a local market with a fair and truly competitive foreign exchange rate regime.
All this requires discipline. We must not fall into the debt-trap. Indeed, our current plans are to rigorously maintain public and publicly guaranteed external and domestic debt to GDP at below 70 percent of GDP. This will be no walk in the park.
We must maintain a current account balance of not more than -3 percent of GDP, create at least 760 000 formal jobs over the next five years and improve infrastructure development, in particular in the fields of energy and water.
Our Budget is a blueprint for growth, a plan for the average Zimbabwean; the entrepreneur and the teacher, the doctor and the farmer.
Agriculture of course remains the backbone of our economy. And increases in agriculture production and productivity, especially by smallholder farmers will ensure food and nutrition security for the nation, as well as greater opportunities for value addition and the development of successful agro-business value chains.
By enhancing investment in mining towards exploration, beneficiation and value addition of minerals — including levelling the field to accommodate small scale miners — we will create more jobs and increase foreign currency earnings for the country.
We will continue to work on creative measures to strengthen our grip on our fiscal and monetary future, with a market clearing foreign exchange rate regime and sequence measures to ensure the Zimbabwe dollar as the dominant legal tender by 2025.
The foreign exchange system will further be strengthened, complemented by building international foreign exchange reserves of at least six months of import cover.
In order to realise improved financial sector stability, the RBZ will continue to strengthen the prudential supervisory policy framework, implement Financial Sustainability Standards, ensure banks maintain adequate capital levels, fully implement the Basel III Accord, and ensure an efficient National Payments System. Our banks must work for you, the people of Zimbabwe.
Government’s re-engagement with the international community still remains paramount; diplomatically and financially.
Importantly, building upon these relationships with successful negotiations of a new debt and arrears clearance programme with external creditors, we aim to open new lines of credit for our economy and Zimbabwean businesses.
As we move forward, in order to reduce fiscal risks emanating from State-Owned Enterprises (SOEs), Government will need to make some radical changes.
These include expediting commercialisation, improving governance, increasing efficiency to provide services at viable prices, full or partial privatisation, as well as outright disposals and amalgamation of some of the SOEs into existing Government Departments.
The time has come to open up our economy to new players, greater efficiency and a thriving private sector!
With this plan, Government is incentivising diversification in the economy and injecting life into the business community. For these processes to truly succeed, in particular privatisation, we need transparent and accountable mechanisms.
A new Zimbabwe, must be an open, transparent and fair Zimbabwe.
Natural resources management, institutional alignment, governance and property rights will be at the top of the agenda as we look to make Zimbabwe a place people want to do business.
Since 2017, Zimbabwe has climbed up the World Bank’s Ease of Doing Business chart by 21 places. This trend must continue to provide the opportunities and jobs are people need and deserve.
At the heart of this is the creation of a knowledge driven economy for sustained growth. Zimbabweans are known and respected around the continent (and beyond!) as an educated and creative people. It is time this is converted into innovation for industrialisation.
Government must continue to invest in the reconfiguration of our education system with a strong emphasis on Science, Technology, Engineering, Arts and Mathematics (STEAM).
In order to keep our brightest and most talented youth, we need to create a country which excites and entices. The most basic necessities are a roof over one’s head and access to healthcare. And while we are reinvigorating our efforts to build houses at a record-breaking level, we are also increasing our health expenditure to revolutionise the health system.
I have spent the last few years representing our great nation in economic forums around the world. I have found receptive and attentive ears.
His Excellency President Mnangagwa’s engagement and re-engagement drive continues to boost the country’s image. And the fruits of these efforts will be borne, through boosted trade and investment, as we march towards Vision 2030.
This strategy will not fund itself. But we have proven to ourselves and to the world that we can manage our funds, our economy and our currency.
We have tightened the belt, and taken back control; now we must spend wisely.
With the dark economic days behind us, and our fate firmly back in our own hands, we too look to the light upon the horizon with hope and optimism.
Hon. Prof Mthuli Ncube is Zimbabwe Minister of Finance and Economic Development