adminTakunda Mugaga
TODAY President Mugabe will once again be inaugurated as Zimbabwe’s President after he emerged the outright victor in the July 31 harmonised elections. While this is a time to celebrate and savour the moment especially on the part of Zanu-PF, there is need to look at the challenges that lie ahead for the incoming administration.
The challenges are quite daunting considering the fiscal state of Government accounts and a burgeoning trade and budget deficit which has traditionally been monetised instead of being handled from a supply side perspective.
Expectations are high that we will have a much leaner Cabinet than the 37 line ministries that were in place during the tenure of the inclusive Government.
I wish to outline some of the issues that rank highly on my list of priority areas for the new Government.
Unemployment
Traditionally, the scourge of joblessness has been an African cancer from the time Ghana won independence in 1957.
In Zimbabwe, there is an urgent need to look into the unemployment issue as a significant percentage of the populace is either jobless or under-employed.
About 42 percent of Zimbabweans are below the age of 15 and sooner or later will require jobs, which means that this is a time bomb that should be treated with the urgency it deserves. With unemployment pegged at over 80 percent, the only viable option is to put in place policy measures which address the unemployment cancer and such measures should have a strong bias to supply side measures compared to demand management strategies.
Corruption
Indeed, corruption levels in the country are quite worrying with cases of State resources being abused.
It is no longer a secret that the propensity to abuse State resources has reached an all-time high and this is mainly propagated by the depressed salary that influence civil servants to be corrupt. The quantum of mineral deposits, parastatal assets and even Government vehicles which are abused need correction and a sense of accountability has to be instilled which will promote accountability.
According to the World Bank Cost of Doing Business Index, Zimbabwe is lowly rated at number 173 out of 181 of surveyed countries and this can be linked to the hidden costs of having to pay kickbacks in order for the job to be carried out.
Therefore, the new Government has to see to it that vibrant policy measures are put in place to curb corrupt tendencies, which also entails strengthening the anti-corruption commission body.
Energy
The burgeoning gap between electricity demand and generation does not augur well for an economy which urgently needs to be turned around.
Assuming all the sectors of the economy are to grow at an average rate of 8 percent per annum, such a growth trajectory will not be maintained given the overwhelming deficit in power generation with current production levels slightly above 1 200MW still falling below demand of about 2 400MW.
Widespread load shedding across the country is not only affecting the welfare of the society, but also the capacity and pace of recovery for agriculture, mining and manufacturing.
The stop-gap measures of securing power imports on a last minute basis should be nipped in the bud while at the same time a pro-active policy strategy should be put in place to boost local generation.
Informal sector
The yesteryear problems which had seen the emergence of an underground economy that is continuously evading and avoiding honouring tax obligations is not sustainable. The dominance of a grey economy over a formal economy is only assisting in crowding out the formal sector that has been contributing to the fiscal performance of the economy.
The narrowing of the tax base is clear testimony of a disintegrating formal sector which had left the nation a net importer of South African goods.
Housing crisis
The huge housing backlog cannot be ignored or wished away. The new Government needs to prioritise the provision of stands especially in major cities and towns.
To talk of tackling the poverty crisis without addressing the housing crisis is certainly a case of putting the cart before the horse.
The growing rural-urban migration has also put a strain on social services and city
Balance of payments deficit
The widening gap between the imports and exports will continue putting a strain on the prospects of economic growth.
The chances of bringing back the local currency continue being postponed against a background of a trade deficit which sees the country failing to build foreign reserves upon which any currency regime should be pegged.
It is expected that the new administration must put in place policies which will boost the export revenues whilst at the same time limiting the import bill.
Policies which promote the production of tradeable commodities should be enhanced as this will help to alleviate the continuous decimation of the economy through dumping by mostly Asian economies.
Christopher Takunda Mugaga is an economist. He is the Head of Research of Econometer Global Capital, a regional finance and economics research firm. He can be contacted on :[email protected] or +263 772 340 353 / +263 776 266 062.
Online Reporter