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NewsDay

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Guest column: Zimbabwe going nowhere fast

Opinion & Analysis
It is instructive to note that in his 2015 budget statement, the Finance minister Patrick Chinamasa, acknowledged that Zimbabwe as a country has an incredibly strong balance sheet, but is failing to unlock the value.

Predator rule politics will never economically emancipate us.

By Vince Musewe

It is instructive to note that in his 2015 budget statement, the Finance minister Patrick Chinamasa, acknowledged that Zimbabwe as a country has an incredibly strong balance sheet, but is failing to unlock the value. That to me is a clear admittance of failure.

This government promised much, but has dismally failed to unlock the unimaginable endowments of the country because of its politics.

Predator rule politics will never economically emancipate us, nor will it unlock the full potential of our country. And so we have a 2015 National Budget that has frozen us in time confirming that as a country, we really are going nowhere fast.

The first issue I want to deal with is that of structural change.

The structure of our economy remains fundamentally a highly politicised State-controlled and fragmented extractive economy that lacks effective planning, project implementation and vision.

This, in my opinion, can only be annulled through political inclusion and less reliance on a politicised State as the chief driver of economic activity.

Fragile States such as Zimbabwe need political inclusion in order to move ahead. Political inclusion builds trust, reduces conflicting vested interests and converts them into national interest. Until we recognise that without national policies built through persuasion and consensus, we shall remain a fragile State unable to unlock its full potential.

Unfortunately I cannot deal here with all the budget issues raised by Chinamasa some of which are welcome and some which clearly lack deep economic foresight.

On the matter of indigenisation, it is refreshing to note that the minister has finally accepted that we had it wrong when the exuberant Environment, Water and Climate and ex-Indigenisation minister Saviour Kasukuwere was going around guns blazing forcing companies to comply and prescribing unrealistic deadlines on when and how to indigenise.

Some of us pointed out at the folly of expecting struggling companies to prioritise indigenisation as opposed to focusing on business recovery. What is the point, I asked, of indigenising failing companies? I specifically said that indigenisation is important, but it is not urgent. Our focus must be job creation.

The idea that companies must now propose time frames is a better approach albeit too open ended. The minister continues to make the same fatal mistake by giving the responsibility of approval and compliance monitoring to line ministries.

We know that as a country we must make it easy for investors to do business in Zimbabwe and yet a potential investor must now first go to the Zimbabwe Investment Authority to get approval, and then go to the line minister for indigenisation approval and compliance monitoring. Add the red tape of local authorities and all the other State parasitic service providers to that and one can really get frustrated before one can create one single job.

This creates enormous and costly red tape, unnecessary delays and too much discretion by the line minister. It opens the door for corruption and cronyism. We know that government ministers in Zimbabwe have a tendency of delaying deals because of vested interests, greasing the Zanu PF patronage system and also being fired quite often. All this frustrates potential investors.

I would have advised that the minister rather appoint audit firms to be compliance and monitoring officers for indigenisation, thus cutting out a lot of red tape, uncertainty and potential corruption. In my view, the business of government is to facilitate and not be a referee and player; the penny must still drop.

On the issue of business revival, we all know that businesses in Zimbabwe are closing because of decreasing disposable incomes, the liquidity crunch, cheap imports, high costs of operating, too much government interference and inconsistent policies. We must deal decisively with the cost of doing business in Zimbabwe to improve our competitiveness.

It turns that apparently an estimated 4 600 companies have called it quits since 2011, but we will never really know the real economic impact of that because we choose to look at number of jobs lost and not the economic value lost to the country.

We must calculate the knock on effect or the collateral damage to suppliers and creditors and ultimately, the cost of lost revenues to the fiscus. For me, the number of jobs lost does not therefore fully indicate the extent of the ripple effect of company closures.

The minister also continues to look at tax concessions to try and protect particular sectors of the economy. In my opinion, although this may help, this does not fully address the problems because, in my view, reduced taxes do not necessarily lead to business viability. Businesses need to make money first before they can pay tax and that is what we should focus on.

It is entrepreneurs who can revive the business sector and they know best how to do so. We must create a culture of inclusion. If I were him, I would put together a business revival revolving fund managed by the business sector, labour and banks. Such a fund could be used to get export companies and struggling, but viable ones back on track through long-term friendly capital.

We really do not need to throw money at nice ideas such as the proposed women’s bank which is really a waste of scarce resources and the minister could achieve same by merely contracting existing micro lenders some of whom are doing very well in targeting women.

This is another example of how we love to create State institutions to solve problems. Why not use structured products which are cheaper and more effective to administer. We could have taken the same approach, for example, with non-performing loans debacle; we do not need another institution around a seemingly temporary problem.

Our challenge is really not the lack of ideas, it is rather because of Zanu PF’s belief that solutions to our problems and all wisdom only reside within the politburo. Nothing can be further from the truth! My my my, we got problems.