United Kingdom Prime minister David Cameron’s Conservative Party has just romped to an impressive victory in the British general elections. How he won a second term for his party may have some lessons for the establishment in Harare.
Five years ago, when the Conservative- Liberal Democrat coalition took office with Cameron as prime minister, Liam Byrne, an outgoing Labour Party Treasury minister left a note stuck on the incoming chancellor’s desk. On it were the now immortal words: “There is no money.”
The incoming chancellor, George Osborne, with the blessing of Cameron, unleashed an austerity programme, “the biggest in post war Britain”, according to The Economist (March 21 2015). The programme saw a million public sector jobs cut. Ceteris paribus (everything being the same) that would equate to a quarter of a million jobs cut in Zimbabwe today. The Zimbabwean Cabinet committee studying an austerity based solution to the country’s fiscal gridlock might need to spend a day with Osborne.
Despite the job cuts, Britons told pollsters “they have never been happier with public services”. The general election outcome in May 2015 confirmed these opinion polls’ findings. The reason, it would appear, is that the British government had hardly cut frontline services (presumably nursing, teaching etc), except local government, the fire department and police — and most Britons remain content with them. Something similar could easily be achieved in Zimbabwe by getting rid of non-frontline ministries altogether and reducing the size of the legislature, police force, Central Intelligence Organisation and army.
Right-sizing government in Zimbabwe to release resource for Public Sector Investment Programmes (PSIP) requires bold innovative strategies. That the PSIP is needed to make the country an attractive and competitive private sector investment and foreign direct investment (FDI) destination is common cause.
In trying to address the funding of the restructuring with the ultimate goal of making resources available for PSIP, the following may need to be done:
The land reform programme could be accelerated by restoring land titling, thereby giving land market value and settling legacy issues. Government employees leasing farms could have their pensions netted off the value of the land.
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Some State-owned enterprises such as Air Zimbabwe and all thermal power stations could, for example, be valued based on forecasting earnings. The government could then issue some shares to workers in lieu of salary arrears and pensions. Listing the entities on stock exchanges would be necessary to raise new capital.
ZimAsset recognises, although in a timid way, the above two sources of unlocking domestic funding. It needs to be much bolder and implement the strategies. The two options are genuine indigenisation and empowerment programmes.
With indigenisation shifted to above two options, scrapping the current 51/49% indigenisation shareholding requirement will result in more private investment and FDI into the country. This will further provide the fiscus with more tax revenues for more PSIP, which would be, in fact, a form of collective indigenisation. Once again the Chinese miracle bears testimony to this.
The approach leads to the creation of jobs, the first step towards genuine empowerment. But in the beginning conviction, self belief and courage are needed. Corruption, of course, has to be tackled as it interferes with the implementation of the first two initiatives while making rent-seeking politicians extremely antagonistic to this fourth initiative.
The fifth “arrow” to borrow the language from Abenomics, is labour law reform. Market forces, production and productivity should dictate wages, not sector-specific negotiations with labour unions.
“If new (or young) firms are to survive (usually inevitable) near terminal mistakes, or fluctuating demand, they need to be able to reduce staff costs quickly and cheaply when necessary,” noted The Economist (July 28, 2012), in an article decrying Europe’s lack of competitiveness in attracting and nurturing entrepreneurial start-ups.
By contrast to the Conservative-Liberal Democrats’ bold initiatives, the opposition Labour Party tried to blame the coalition government’s spending and job cuts.
The electorate, however, was not fooled. Britain’s economy is the fastest growing in Europe. Those who lost jobs in the public sector found them in the private sector. For a time salaries were stagnant, but with the implementation of another bold initiative, this time a financial one (Quantitative Easing) to compliment the earlier fiscal one, salaries are rising again.
According to The Economist quoted above, Labour parliamentarians exaggerated the pain of austerity which hurt them in this May’s elections.
It made them look hysterical, while making the Tories look competent — by seeming to have pulled off huge cuts which most Britons saw the need for, rather painlessly.
And rather painlessly too, Zanu PF can deliver on its ZimAsset, albeit in more modest terms as regards job creation. But boldness is needed.
Wouldn’t it be nice if the script for Finance minister Patrick Chinamasa and his boss President Robert Mugabe read like that of Osborne and Cameron, come 2018 general elections? Really, wouldn’t it?
lTapiwa Nyandoro can be contacted on [email protected] or [email protected]
