adminAlbert Norumedzo On the Money
A story is told of two men who got shipwrecked out at sea far away from home, they were eventually washed onto an island in the middle of the sea.
On the island they faced the dilemma of whether to hope and wait for help, make do with what was around them or stop hoping that someone would come to their rescue.
This story bears a striking resemblance to the status quo prevailing in Zimbabwe.
For a long time the solution to the prevailing economic challenges has been seen as external, either in the form of Foreign Direct Investments and or debt financing.
It makes economic sagacity to move the motion that Foreign Direct Investments and financing will bring an end to the prevailing liquidity squeeze and the economic slowdown, that long term investment would revive the country’s ailing industrial sector and restore activity in the manufacturing sector which is currently operating at below 40 percent capacity and revive the agriculture sector that once fed the whole of Africa at its optimal or better still bring the mining sector to its fullest potential given the abundant resource endowment.
Indeed liquidity is the missing piece and without it all the country’s economic policies and strategies will remain blue prints.
The fact that we need to oil the wheels of our economic to our desired destiny is not debatable.
Without an injection of liquidity the whole system is bound to seize, which will result in the reversal of the progress that we have made since 2009.
Suffice to say the role of liquidity in economic recovery and growth is not the subject of debate in this issue.
The real question however is; should we bank on external support to provide the much needed liquidity injection and if not to what extent are we able to revive our economy drawing on the available infrastructure and resources.
Zimbabwe owes in excess of US$10 billion in external debt to financial institutions who have indicated their indisposition to extend credit before the current obligation is honoured.
During the Government of national Unity the then Minister of Finance Tendai Biti echoed a popular phrase, “we will eat what we kill” this was after efforts to acquire external financial supported were frustrated by the huge debt overhang, operational bottlenecks and country risk factors (much of which still remains).
To call a spade a spade, I think it’s time we awaken to the harsh reality that it won’t be easy to attract external financial support and Foreign Direct Investment.
Zimbabwe is ranked 170 out of 189 Economies on the World Bank’s Ease of Doing Business rankings above war zone countries like Afghanistan, Iran, Iraq and Gabon.
In Africa we are ranked 34 out of the 48 rated countries; this means an investor has 33 other alternative and more attractive destinations to consider investing in before considering Zimbabwe.
The world Economic Forum in its latest edition of Global competitiveness Index (GCI) ratings places Zimbabwe among the least economically competitive countries in the World among the 148 rated countries at number 131 with a score of 3,44 out of 7.
The Global Competitiveness Report assesses the competitiveness landscape of 148 economies, providing insight into the drivers of their productivity and prosperity.
Whether we agree with or dispute these ratings and standings is not the question we should be answering, the fact remains that these Institutions’ opinions and recommendations have a significant bearing on the decisions of potential international Investors, both allies and foes, sympathisers or critics.
Whether these rankings are a true reflection of the Zimbabwean situation is not very relevant but the fact is that this is the perception we have to contend with when we go out to look for financial support and lobby for Foreign Direct Investments.
The recent press reports of gross corruption and mismanagement in quasi and or semi fiscal entities has further dampened confidence in public or Government related entities with regards their ability to function transparently and efficiently, further elevating country risk concerns.
This does not work in our favour if we want to attract potential partners and investors for our Private Public Partnerships.
It’s clear that in such an environment attracting meaningful and mutually beneficial funding might be an uphill task.
In light of these hurdles Zimbabwe’s economic fortunes lie in its own internal capacity derived from its already existing infrastructure and resource endowment.
If efficiently utilised and transparently managed, the capacity in the mining, agriculture, service industry, transport and distribution sectors, with a little support the manufacturing sector, is enough to initiate and sustain estimated growth of at least 5 percent per annum.
True this might seem too optimistic to some but it is very much possible.
We have a lot of mineral resources such as platinum (second largest deposits in the world), coal, iron ore, gold and lately also diamonds that have been found in considerable deposits that we can leverage on.
We also have copper, chromite and nickel deposits, though in lesser amounts. The Marange diamond fields, discovered in 2006 are thought to be among the richest in the world.
Zimbabwe has vast arable land and agriculture infrastructure that requires little rehabilitation to function at full capacity, a level which at its apex could feed the greater part of Africa.
And to top it all up we have enough competent and skilled human capital to effectively piece the system together, where then do we miss it?
The implementation gap: Policy has been crafted, deliberated upon and tabled for adoption and in some cases efforts have been made to action the vision but a huge gap exist between strategy and implementation.
In order to make real progress the strategy has to be implemented religiously by responsible executors who should be accountable to the public directly or indirectly.
Authorities should be made to pay for the consequences of their action in case of failure or abuse of authority, resources and responsibilities.
A lot has been said with regards to bringing public officials to ensure accountability in public offices and bringing offending officials to book but very little headway has been made in this regard.
However the proffering of criminal charges on some corrupt company officials recently is a welcome development, which should be extended to all facets of public responsibility.
Public revenue collection needs to be enhanced to avoid leakages and cement the fiscal base so as to give the Government the financial capacity to carry out more infrastructure projects which have in the past been suffering as most of the money was being channelled to recurrent expenditure.
Every cent counts and revenue leakages in whatever form will only pull the nation back as fiscal pressure diverts attention from investment and policy implementation.
Resource utilisation should be monitored and accounted for; those with arable land must use to produce for the nation.
Those with mining claims must use them failure of which should warrant immediate repossession of the resource and its allocation to other willing and able people or companies that will fully exploit the resource to the benefit of the country.
It is only through covering the basics that we can begin to drive our growth from within.
Unless and until we can walk the talk and transform the blue print into action then all policy and strategy will not translate into real progress.
Like the two men stranded on the island in the story above, survival is embedded in the realisation and acceptance that survival rests with us.
Zimbabwe must awaken to the reality that much of the desired economic growth and recovery will come only at the cost of our own united efforts.
External support will be secondary to our own efforts.
Albert Norumedzo is an Equities and alternative Investments Analyst. Feedback: [email protected].
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