Online Reporter
Nick Mangwana
Government Up Close
LIKE many countries in the post-independence era, Zimbabwe adopted an organised economy where the state held a monopoly over economic activity. This approach was deemed necessary to drive socio-economic transformation, ensuring that the majority, who had previously been marginalised from mainstream economic activities, could access essential services and opportunities. State enterprises played a crucial role in wealth distribution and protecting vulnerable populations. For instance, the Grain Marketing Board (GMB) ensured food security by making grain accessible to all, while the Zimbabwe Electricity Supply Authority (Zesa), before the advent of ZERA, worked to extend electricity services to unserviced and underserved areas.
However, as Zimbabwe continues to evolve, the focus has shifted towards embracing the principles of freedom and competition as catalysts for economic stimulation and societal progress. The aim now is to enhance the efficiency of production systems and foster a thriving private sector, recognising its potential as a key driver of economic growth and development. This transition reflects a broader effort to create a more dynamic and inclusive economy, where the private sector plays a pivotal role in shaping Zimbabwe’s future.
Zimbabwe, a country with a rich history and vast economic potential has embarked on a significant journey towards building a private sector-driven economy. This strategic shift is aimed at unlocking the country’s growth potential, creating jobs, and improving the standard of living for its citizens. The private sector, known for its efficiency and innovation, is being positioned as the engine of growth, while the Government focuses on creating an enabling environment to support its development.
For years, Zimbabwe’s economy was characterised by a dominant state role, with Government-controlled entities driving key sectors. This approach achieved a lot, albeit with some attendant inefficiencies, limited competition, and a lack of innovation. The economy is now being repositioned to catalyse transformative growth. Recognising the need for change, the Government has embarked on a new path, one that leverages the strengths of the private sector to drive economic growth and development.
A private sector-led economy is a powerful driver of innovation and productivity. The profit motive that drives private companies incentivises them to constantly innovate and improve their products, services, and processes. By adopting new technologies, implementing international quality standards, and leveraging better managerial capabilities, private sector companies can significantly enhance their productivity and competitiveness. This, in turn, enables them to expand their market share, create new opportunities, and contribute to the overall growth of the economy.
The private sector’s innovative spirit is not limited to product development; it also extends to process improvements and the adoption of new technologies. By embracing cutting-edge technologies and management practices, private companies can streamline their operations, reduce costs, and improve efficiency. This enables them to stay ahead of the competition and respond to changing market demands. Furthermore, the private sector’s focus on innovation and productivity can have positive spill over effects on the broader economy, driving growth and development.
It’s time for us to recognise and celebrate the role of entrepreneurs in driving economic growth and job creation. Rather than vilifying them, we should be embracing and supporting our entrepreneurs who are the backbone of our economy. As job creators, they are the ones who are driving innovation, investing in new ideas, and providing opportunities for others. By creating an enabling environment and providing support to entrepreneurs, we can unlock the full potential of the private sector and drive economic growth and development. Let’s shift our mindset and start recognising the value that entrepreneurs bring to our economy. But this is not an unconditional support. It comes with a demand for value and accountability. We should also make a distinction between entrepreneurship, which involves creating value through innovation, risk-taking, and hard work, driving economic growth, and tenderpreneurship, which relies on Government contracts and connections, often stifling competition and innovation, and undermining the potential for sustainable economic development. It is the entrepreneur that spearheads a private sector led economy.
A private sector-led economy provides a vibrant ecosystem for entrepreneurs to thrive, offering fertile ground for start-ups and businesses to grow. By fostering an environment that encourages innovation, risk-taking, and competition, the private sector enables entrepreneurs to turn their ideas into reality, creating new opportunities and driving economic growth. As these businesses expand, they generate employment opportunities, absorbing labour from various segments of the workforce and contributing to a reduction in unemployment rates.
The private sector plays a crucial role in employment creation, often employing a larger portion of the workforce compared to the public sector. By creating jobs across various industries and sectors, private companies help to stimulate economic activity, increase disposable income, and boost aggregate demand. Moreover, private sector employment opportunities can range from skilled professional roles to unskilled labour positions, providing a diverse range of job prospects for individuals with varying skill sets and educational backgrounds. By leveraging the dynamism of the private sector, economies can unlock significant potential for job creation and sustainable economic growth.
Right from the start of the Second Republic, President Mnangagwa said that a private sector-led economy is a powerful wealth creator, driving economic growth and development through innovation, investment, and job creation. Remember when he also said, “through such initiatives, the country was advancing the building of a diversified and sustainable economy, where value addition thrives and industries drive economic growth for the benefit of all Zimbabweans”. Entrepreneurs and businesses are the engines of this growth, leveraging their creativity, expertise, and resources to build successful ventures that generate wealth and prosperity. While the creation of employment opportunities benefits many individuals, it’s essential to recognize that entrepreneurs also deserve to benefit from their creativity, innovation, and hard work. By allowing them to reap the rewards of their endeavours, we can incentivise further innovation and investment, leading to even greater economic growth and development. Let us not vilify those that make hard-earned honest wealth out of our economy and, by all means, let us frown upon fly by night so-called business persons who employ nobody, but those who cheer them along.
The private sector’s role in boosting investment and economic growth cannot be overstated. Private sector investments are a major source of economic growth, contributing to infrastructure development, expansion of industries, and overall economic development. By investing in new projects, technologies, and processes, private companies can increase productivity, competitiveness, and efficiency, leading to higher economic output and growth. Moreover, a thriving private sector can attract foreign direct investment (FDI), which can further boost economic activity and development. FDI can bring in new capital, technologies, and management practices, helping to modernise industries and increase their global competitiveness.
By embracing a private sector-led economy, we are working to unlock the full potential of entrepreneurship and innovation, driving wealth creation and economic growth. But it should never be a free for all. It’s essential to strike a balance between allowing entrepreneurs to benefit from their success and ensuring that the broader population also benefits from economic growth. By creating an enabling environment that supports private sector development, we can foster a vibrant economy that generates wealth for the shareholders and owners, creates jobs for the general population, and improves living standards for all. For that to happen, we need fair competition.
A competitive private sector is a key driver of efficiency and innovation, pushing companies to be more responsive to market demands and deliver high-quality goods and services at competitive prices. In a market economy like ours, firms are incentivised to innovate, reduce costs, and improve their offerings to attract and retain customers. This competition fosters a dynamic business environment where companies must continually adapt and evolve to stay ahead of the competition. As a result, consumers benefit from a wider range of choices, better quality products, and lower prices, ultimately driving economic growth and development.
In this market economy, competition also promotes the efficient allocation of resources, as firms that fail to innovate or respond to market demands are likely to lose market share and eventually exit the market. This process of natural selection ensures that resources are allocated to the most efficient and innovative firms, driving productivity growth and economic development. By promoting competition and efficiency, a private sector-led economy can create a vibrant and dynamic business environment that benefits consumers, entrepreneurs, and the broader economy. By embracing the principles of a market economy, we can unlock the full potential of the private sector and drive sustainable economic growth and development.
The private sector plays a vital role in addressing some of the country’s most pressing challenges. By leveraging their expertise, resources, and innovative capacity, private companies can develop and implement solutions that help mitigate the impacts of climate change, create sustainable urban environments, and expand access to financial services for underserved populations. This is why this writer fully supported the idea of the private sector being involved in providing solutions to water challenges in areas such as Harare.
The private sector is well-placed to drive Zimbabwe’s economic growth due to its inherent strengths. Private companies are agile, innovative, and responsive to market needs. They are better equipped to identify opportunities, manage risks, and invest in areas that offer the highest returns. By giving the private sector a leading role, Zimbabwe can tap into its creativity, expertise, and resources, leading to sustainable economic growth. But let us not have an unregulated jungle.
A well-regulated and supportive business environment is crucial in reducing the size of the informal sector, which often lacks productivity and creates unfair competition. The informal sector, characterized by unregistered and unregulated businesses, can hinder economic growth and development by depriving governments of revenue and creating an uneven playing field for formal businesses. By streamlining regulations, reducing compliance costs, and promoting transparency, governments can create an environment that encourages businesses to formalize and operate within the formal sector. This, in turn, can lead to increased productivity, improved working conditions, and better protection for workers’ rights. By promoting formal business activities, governments can also increase tax revenues, improve labour standards, and enhance the overall business environment. Simplifying regulatory procedures and reducing compliance costs can make it easier for businesses to register and operate formally, reducing the incentive to operate in the informal sector. Additionally, promoting transparency and accountability can help to build trust in government and institutions, encouraging businesses to comply with regulations and contribute to the formal economy.
To further support the private sector, the Zimbabwe Government is working to improve the ease of doing business, streamlining processes and reducing bureaucratic hurdles that can hinder business growth. This includes simplifying licensing procedures, reducing compliance costs, and enhancing transparency and accountability. By making it easier for entrepreneurs to start and grow their businesses, the Government can unlock the full potential of the private sector, driving innovation, job creation, and economic growth.
The Government is playing a pivotal role in fostering a conducive environment for both foreign and local investment through the Zimbabwe Investment and Development Agency. This authority is instrumental in promoting investment opportunities, streamlining the registration process for new businesses, and offering support services to investors. By actively promoting both domestic and foreign investment, the Government aims to attract capital, technology, and expertise that can stimulate economic growth, create jobs, and enhance the country’s global competitiveness. This dual focus on local and foreign investment can help leverage the strengths of both, driving sustainable economic development and prosperity.
Further, in recognition of the vital role Small and Medium Enterprises (SMEs) play in the economy, the Government has initiated programs to support these businesses. SMEs are crucial for job creation, innovation, and economic diversification. Initiatives include providing access to finance, training, and other resources tailored to the needs of SMEs. Government has programs to help these businesses overcome challenges such as limited access to capital and markets, thereby enhancing their contribution to economic growth and development. This support is essential for building a robust and resilient private sector that can drive sustainable economic progress.
Zimbabwe is well-positioned to build a thriving private sector-driven economy. Government will continue to create an enabling environment, investing in infrastructure, simplifying regulatory frameworks, and promoting investment. The private sector, in turn, must take advantage of these opportunities, investing in key sectors and driving innovation. By working together, the Government and private sector can create a thriving business environment that benefits both the economy and society as a whole.
Nick Mangwana is the Permanent Secretary for Information, Publicity and Broadcasting Services
