Guest Column: Brian Sedze
The economic challenges facing Zimbabwe are not about money. Our major issue is deficiency of a supportive government with competencies to design policies that enable innovation and value creation.
The country should also not pin its hopes and aspirations on welfare economics, but rather, it must trade for success. That trade requires new products and solutions instead of benevolence.
National leaders should also disabuse themselves from the fallacy of new money from Bretton Woods, but instead walk into private banks with bankable projects.
The importance of the Bretton Woods institutions should basically be the simultaneous and sequential signalling that the country is not in good hands.
The ‘open for business’ credo, itself a flawed public policy initiative, is premised on foreign direct injection of money. The government expects money without creating a platform for ideas. A country that needs money should be alive to the fact that money chases ideas, not vice-versa. Without ideas, money will not come. Instead, we have to be content with resource robbers.
Creative ideas, intellectual property and new knowledge enable conversations with private banks, venture and private equity firms, among many global funding options. Ideas should be to creatively solve unique challenges, satisfy local demand and for the production of exports to the world.
At the moment, all the government is seized with is trying to solve old problems with new money. New money must be used to create new demand and export orientation.
The government mindset is warped and captured in the old in that they believe the old industries should be resurrected and made to run again. But opposed to that, it should throw away the bravado and have a starting point, where we have to think afresh as if there were no Zimbabwean industries at all.
One Langton Chirinda said:“Zimbabwe should be viewed as completely dead economy-wise and that we have to think afresh as if there were no Zimbabwean industries at all!”
In that respect, we should see the government embark on massive trial and error through research and development budgets! This must be the biggest budget for now — to stir up new thinking that would result in new industries and a new economy!
The government should no longer view itself as this Leviathan that exists to tax existing industries and few employees to the last cent, fix market failures, provide public goods, fund infrastructure and correct industry externalities, but instead drive the next big revolution in innovation and germination of new enterprises.
Let us learn from the Americans and Rhodesians.
The United States became a powerhouse by directly supporting those who were innovative. It often had to move from an innovation policy maker to a player, the reason why the coolest tech companies are American. In fact, some of their great industries germinated within the army. America is great because of innovation, not resources.
Ian Smith made Rhodesia a breadbasket by supporting industries in agriculture. Rhodesian products commanded respect and had demand across the region due to the implementation of quality ideas in agriculture.
In fact, most of the few agricultural products we still export are relics of the colonial government economic initiatives. The country has failed to move forward, nearly four decades later.
Hundreds of manufacturing and service industries post-1965’s Unilateral Declaration of Independence in Rhodesia depended on agricultural inputs to germinate and run.
We are presently producing products and services that our regional peers and trade partners already have a better competitive advantage comparatively. We will not create valuable exports by investing in this old way of thinking.
Import substitution is a great option, but it should be done by creating and leapfrogging new processes and technology. Investing in ensuring that our country is not being taken advantage by neighbours is a start to great import substitution.
The country may leverage on its resources to create more value instead of just deriving national pride from good soils, great weather and minerals. Is it not shocking that upmarket furniture shops in Zimbabwe import from the United Arab Emirates, an arid country without significant forests and cattle?
The crowds that advise the President (Presidential Advisory Council (PAC), Cabinet, government “technocrats” and other informal structures) should start with this very basic new truth. The new truth is that the country doesn’t need economic renewal, but a complete new birth.
With this new truth, the President should start with a national plan, then derive a structure (ministries and State actors) from there. Structure follows strategy, not vice versa.
Zero-based budgets must be implemented: They should be speaking to national strategy of value creation. More resources should be applied in the generation of the new, instead of feeding the same old and non-value adding structures.
A lot of ministries should be disbanded as they were able to only serve the 1980 economic realities, and not those of 2018. The country should have more ministries focussed on re-birth, creating a new economy and a new Zimbabwe with a focus on radical and disruptive initiatives.
The much touted mega deals, unfortunately, are not exactly the answer as they are mostly based on primary resources. Exporting our chrome, gold, tobacco, lithium, gold, coffee and so forth, without a value addition, will build industries in other countries.
In fact, the companies driving mega-deals are doing exactly what we should be doing. Walk into private banks with business plans to borrow. Not much equity is invested by these companies, rather they invest in ideas.
In their stride, the major idea is that Zimbabweans are sleeping on their laurels and their minerals can be taken after paying a pittance.
To enable creation of the new, the government must entrench fiscal laws that are punitive to exporting raw and a reward system for value adding industries.
Part of the success matrix is to reward technology transfers and local human capital capacitation. Though implemented halfheartedly, value addition proposal in ZimAsset was a step in the right direction.
Beyond the metrics of creating both employment and spurring investment, it is also of strategic importance to have nationals controlling primary resources. The badly negotiated mega-deals disinherits our children.
If we invest in thinking, idea formulation and commercialisation of innovations, we are likely to meet success. This idea of thinking we can just have money without investing in ideas will continue our circle of poverty. We have to create the new.
Brian Sedze is strategy consultant and president of Free Enterprise Initiative. Free Enterprise Initiative is an advocacy in less government, free enterprise, fiscal and public policy. He can be contacted on email@example.com