Let’s now focus on economy

Albert Nhamoyebonde
WHILE celebrations by all who voted and support Zanu-PF are the order of the day, what is now looming is to transform political power into economic success. Political issues have been settled with the emphatic win by President Mugabe and the Zanu-PF party getting a two-thirds majority in Parliament.

What are the economic issues facing the new Cabinet and the country as a whole? I will narrow it to one fundamental issue — that of production of goods for the local and export market.

No country can depend on imports of finished products to create wealth or have a sustainable economic growth.
A country has to develop a productive economy underpinned by agriculture. The missing link in our productive economy is the underfunded agriculture sector. Many people may not realise that factories were actually owned by farmers who had shares in the manufacturing industries.

When those white farmers were told to leave the farms the factories closed down because the shareholders, mainly farmers, had ceased to produce what the factories required. The new farmers who took over the land do not realise that they should become the new owners of the factories.

The new resettled farmers must have shares in factories that will process their products from the farms, be they, tobacco, maize, cotton, etc. For example, farmers that produce soyabeans must have shares in cooking oil processing plants or companies. The same goes for tobacco farmers; they should also own shares in tobacco processing companies.

What is happening now, where farmers realised US$500 million from the sale of their tobacco but did not use the money to buy shares in industry, will defeat the whole idea of reviving the manufacturing industry.

It is not only insurance companies that should invest in manufacturing companies but farmers must have a controlling equity in manufacturing companies to serve their interests and, at the same time, make extra money from dividends realised after the finished factory products are either sold on the local or export market.

It is not just the farmers that should have shares in factories but also the general public. One medical practitioner felt that the market for shares was very volatile so much that he did not want to lose money if he bought shares in companies. He cited banks that had failed for lack of good management.

He preferred to put his money into buying luxury vehicles which he could sell after a few years and still get a profit. But this type of investment cannot create jobs if people do not put their money into companies. Yes, there has been a variety of failed companies, in the private and public sectors since independence.

Another aspect which is at the forefront of the people’s minds is the retention of the multi-currency system which has been confirmed by the RBZ Governor, Dr Gideon Gono, and Zanu-PF.

Although the use of the multi-currency system is very restrictive in promoting economic growth, the re-introduction of the Zimbabwe dollar cannot be a priority at present.

A Government which does not have the ability to print money cannot achieve real economic growth. It has been reported that Britain printed £375 billion from 2005-2012 to boost economic growth.

The USA government is still printing money which they call a stimulus system to maintain economic growth in their country. EU countries are denied this lifeline by their use of a single currency. These EU countries are, instead, being urged to cut expenditure resulting in their people perpetually being on the streets to demonstrate against persistent cuts after cuts.

The major question that people may ask is: Where will the Government get the money to invigorate a sustainable economic growth? One avenue to follow in the absence of the ability to print money is to float Government bonds. At one time, the RBZ pleaded with banks to subscribe to purchasing Government bonds.

It was reported that the banks were reluctant to buy these bonds since they (the banks) did not have enough cash. But, it has been reported that there is about US$3 billion in circulation outside the formal banking system held by people or other organisations. How can this money be tapped to buy bonds which can then be channelled to financing agriculture?

Many people are of the opinion that the commercially viable banks could be appointed underwriters for the bond issue. What is lacking to attract this kind of investment is the perception that the money will not be put to its proper use by farmers and other Government officials. People do not want to lose their hard-earned money if at the end of the day, they cannot get their money back.

There have been many instances where the Government has guaranteed money borrowed to finance farming activities and has not been paid back by the farmers even after getting better harvests. This culture of not paying back loans given in good faith without collateral has been abused.

Another aspect has been to forgive those ratepayers who owed thousands of dollars to start afresh. Will they start honouring their bills without defaulting again and wait to be forgiven at the next election?

Revenue to run the Government has to be generated from economic activities that are underpinned by agriculture, manufacturing and retail. Money coming from mining and related industries should be channelled to agriculture and manufacturing. If this money goes to meeting Government expenditure, then there will be no sustainable economic growth.

Industry, manufacturing and agriculture will be starved of finance.