Mobilise funding for Zim Asset

Zimbabwe will gain additional revenue if it can add value to minerals

Carter Mavhiza Business Correspondent
The basis for growing our economy over the next five years has been outlined in the Zimbabwe Agenda for Sustainable Social-Economic Transformation (Zim Asset) blueprint. The document has already generated a lot of interest among local and regional analysts. Several regional countries have already expressed their support for the blueprint.

However, the major talking point has been on how Zim Asset will be funded. The blueprint identifies the creation of a Sovereign Wealth Fund, Public Private Partnerships and Foreign Direct Investment as the source of funding.

These sources are meant to oil the mechanised economy of Zimbabwe and make it a fully functional unit.

Foreign direct investment is the biggest priority for our economy right now if we are to be able to add value and beneficiate our local produce, which is one of the pillars of Zim Asset.

There is need to create a conducive environment to attract investment. For this to happen we need good governance, reputational risk and regulatory systems.

The flow of investment into the economy hinges upon the successful management of these issues. Zim Asset clearly point out the key to effective implementation of the blueprint as corporate governance and results based management system.

In terms of corporate governance it is important that practical efforts are implemented in all Government departments because they will spearhead the execution of sectoral targets in the new framework.

Government should set the tone for good corporate governance and this will cascade to the private sector. Commitment alone without practical actualisation or implementation of corporate governance will not yield the desired results.

No single investor is willing to spread themselves thin over a system that is not transparent. Rampant corruption in Government departments and parastatals need to be dealt with.

We have to demonstrate our keenness to build the economy through a sequence of accurate actions and choices.

Reputation is gained from such actions. Reputational risk is earned as a result of misaligned actions. The rent-seeking behaviour that is at the centre stage of our society needs to be addressed.

Common trends reveal that funds from foreign sources whether to non-governmental organisations, the private sector and Government departments has been subject to misappropriation.

Management perks and benefits have been accounting for a greater proportion of the funds received. In some cases more than half the funds received for projects are used in non-core project issues.

Government should continue to explain its position on the indigenisation law need to investors.

It should be commended for adopting a soft stance on the application of indigenisation thresholds for investments in sectors such as manufacturing where shareholding will be negotiated as opposed to mining where shareholding should be 51 percent for indigenous Zimbabweans and 49 percent for foreign investors.

While foreign direct investment plays a vital role in the economy there is need to focus on local investment. Local investment is the sum total of household saving and retained profits from both formal and informal trading quarters.

There has been clarion calls to mobilise household savings because they are key in turning around the economy.
Perception plays a very important role in the mobilisation of household savings. The 2003-2009 banking crisis left many scars on the saving public.

The adoption of the multi-currency system saw unit trusts, pension savings, current and savings deposits being written down to zero.

Most people lost their life savings while some companies lost millions in foreign currency that was accessed by the Reserve Bank of Zimbabwe from their accounts

The Government has since agreed to take over the Reserve Bank’s debts. This offers a ray of hope to many institutions as far as eventually getting their money.

However, there is need to ensure that the reserve bank will not unilaterally access accounts again. Without such assurances it will be very difficult to mobilise surplus resources from the public and local businesses because who will be monitoring the monitor.

There is need to clear the fog that is besieging the financial landscape so that confidence in the financial intermediaries is restored.

The creation of the Deposit Protection Corporation is a welcome development, but that alone without tangible reforms in the banking sector cannot yield the desired results.

Reputation plays a role in banking and institutions such as Barclays Bank, Stanbic Bank and Standard Chartered Bank are not sweating as locally owned banks for deposits even though they need massive reforms to appeal to the public because their reputation is intact.

There are millions of dollars in household savings that are circulating outside the banking sector. Some of the money is changing hands daily via EcoCash which has motivated Steward Bank to guarantee EcoCash savings.

Sanctions have also seen some transactions being settled in coins and notes no matter how big the values are.

These resources in many instances never find their way into the banking sector unless certain third parties decide to make short term deposits. Failure to accelerate the issue of plastic money is the other major issue that is curtailing the flow of funds into banks.

There is need to encourage banks to expedite the shift to plastic money.

If all civil servants were using plastic money to make their purchases we will eliminate the queues. Banks need to take the plastic money revolution seriously.

Given that we do not mint the greenbacks here surely the use of plastic money is the way forward. Zim Asset is the way it just need implementation.