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Dr Bongani Ngwenya
Preamble:
IT is so ironic to see the level of economic challenges that Zimbabwe has continued to experience since the beginning of the economic problems 2008-2009.
Zimbabwe’s literate level is incomparable within the continent of Africa. There is no country in this world that does not have a Zimbabwean within its economic structures, even at decision making levels.
I am not a politician, and would not really want to discuss politics. For how long are we going to continue with this ostrich mentality, of burying the head in the sand, and fooling ourselves that we are safe with the rest of the body exposed?
Our major problem is, “denial” at national or economic planning level. When we started experiencing fuel shortages, and power cuts in this country for example, there was this attitude of denial, that is, “the choice to refuse reality”.
We continued experiencing the shortages until it became normal that the economy can be sustained with erratic fuel supplies and power cuts that ended up severely affecting the productive capacity of our industry.
It is unfortunate that even today we are still suffering from this disease of denial, when there is clear evidence that our so called “look internal only” economic policies do not work.
The theory of denial was first researched seriously by Anna Freud.
She classified denial as a mechanism of the immature mind, because it conflicts with the ability to learn from and cope with reality.
Where denial occurs in mature minds, it is most often associated with death, dying and rape. More recent research has significantly expanded the scope and utility of the concept.
Elisabeth Kübler-Ross used denial as the first of five stages in the psychology of a dying patient, and the idea has been extended to include the reactions of survivors to news of a death.
Our economy is facing problems, but we are in this denial still.
Course of reforms:
The Zimbabwe economy stagnated beginning 2014 after the marginal gains on recovery experienced over the period of the Government of National Unity and has even declined further in absolute terms now, from the whole of 2015.
This is the period when deflation began to rear its ugly impact on the economy.
The newspapers were awash with praises that prices were going down. Least did our economic planners appreciate that the negative inflation phenomenon could not or cannot be economically sustainable.
Everybody was so obsessed and got carried away by the negative sign (-) that prefixed the month-to-month and annual inflation statistics data released by Zimstat.
It took some of us, and other economic analysts to raise alarm that deflation is a latent evil and depressor of economic growth.
I am reminded of one of my economic focus articles that I wrote early this year.
Zimbabwe now requires economic reforms that will ensure market efficiency once again, economic reforms similar to ones introduced by China beginning in 1978 and, carried out in two stages.
The first stage should involve the de-collectivisation of agriculture.
Let’s designate our agricultural sector a special economic zone, open the sector to both domestic and foreign investment.
Let’s open our economy up for more foreign direct investment (FDI) inflows, and encourage in the form of real financial support and lines of credit our local industry to produce enough for domestic consumption and export.
Our industry needs resuscitation that is, re-opening all the companies that have shut down and at the same time setting up new businesses.
The second stage of reform should see and involve the privatisation and contracting out most state-owned industry and parastatals, doing away with protectionist policies — that is, disengaging completely import bans and investor unfriendly regulations, although state monopolies in sectors such as power and energy distribution can at this stage remain under state control.
The private sector should be allowed to grow remarkably, accounting for as much as 70 percent of Zimbabwe’s Gross Domestic Product (GDP) within the second stage of economic reform.
This would ensure that the economy grows to unprecedented levels, with the economy growth increasing by 5,5 percent a year on average.
The success of Zimbabwe’s economic reform policies and the manner of their implementation would result in immense changes in the society.
The socio-economic insecurity bedevilling people will be a thing of the past, as a result of sustained and large-scale Government planning programmes alongside market characteristics to minimise poverty.
The opening of the country’s economy to foreign investment during the period of economic reform through deliberately created series of special economic zones for foreign investment that are relatively free of the bureaucratic regulations and interventions is what this country needs.
These regions will become engines of growth for the national economy. The continued declining fiscal capacity by the Government to finance its recurrent expenditure, especially paying civil servants salaries on time and the current liquidity crisis in the economy should provide a renewed impetus for Zimbabwe to reform its economy.
In conclusion, this persistent attitude of denial will not help this country at all. The honourable Vice-President Emmerson Mnangagwa in his address when he was opening the Zimbabwe National Chamber of Commerce (ZNCC) Annual Congress in Victoria Falls last week, acknowledged that the country is in an economic mess.
Something needs to be done to change the direction of the economy. It is my conviction that what needs to be done is to engage in economic reform now. There is no other solution.
Dr Bongani Ngwenya is a Bulawayo based economist and senior Lecturer at Solusi University’s Post Graduate School of Business [email protected]/ [email protected]
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