By Vince Musewe
ZIMBABWE recently received a whooping US$961 million under the IMF special drawing rights (SDR) facility. The SDR is an international reserve asset created by the IMF in 1969 to supplement the official reserves of member countries. It is a potential claim on freely usable currencies of the IMF members. On August 23, the IMF implemented a general allocation of SDRs equivalent to US$650 billion. This is the IMFs largest distribution.
As with all windfalls, there is high risk that these funds can be mis-used as members are not accountable to the IMF for their use, but must rely on their country’s institutional governance with regard to integrity, transparency and accountability. Zimbabwe’s Finance minister Mthuli Ncube has made assurances that these funds will be utilised to improve provision of social services (health and education), enhance social protection, boost investment in agriculture, mining and industry, fund infrastructure development (roads and housing) and shore up the country’s reserves to support macro-economic stability.
In total, Zimbabwe requires much more than $1 billion to revive the economy to its full productive capacity. In my opinion, Zimbabwe needs a US$50 billion Marshall Plan intervention in order to restore democracy, modernise industry, rebuild physical and social infrastructure, revive agriculture and ensure food security, provide social safety nets, support and formalise grassroots commerce, transform State enterprises, unlock small to medium enterprise potential, increase productivity and competitiveness and re-build new democratic institutions. For now we, however, need to make use of what’s on the table.
What would I consider in relation to effectively utilising the US$961m?
The first thing I would do is to ask for submission of proposals from relevant stakeholders, especially those outside government. This would allow me to have a broader perspective of what needs to be done on the ground despite what I may think. Many a time politicians fail to consult and this leads to avoidable mis-steps. Generally, I have found that the people on the ground know better what needs to be done because they are at the coal face and understand the problems better.
Second, I would specifically require provinces to submit their needs per priority sectors as above. It is very important that we take every opportunity to create inclusive economic development. A key prerequisite would be to ensure there is capacity at provincial level for funds management.
Third, I would establish a committee to oversee implementation. The minster has established one which includes Reserve Bank of Zimbabwe governor John Mangundya and Finance ministry permanent secretary George Guvamatanga. I have much respect for these two colleagues, however, everyone, including me, has a blind spot and it would have been beneficial to include sectoral experts from outside government. I do trust, however, that they will consult and be open to new ideas. Having done the above, I would rank my priority clusters as, human capital development, food security, industrial production, infrastructure and macro-socio-economic stability.
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On human capital development
In my opinion, everything starts and ends with people. A healthy, educated and skilled society must be at the centre of economic development. Access to affordable health and education services at local level is a right and not a luxury. We must ensure that all our medical facilities are functional, well equipped and have medicinal stocks required to meet needs. Added to that we must pay our health professionals a decent wage. On the education front we must ensure all our schools are well equipped, have access to ICT and our teachers are paid a decent wage.
On food security
Any country which fails to feed its citizens and minimise poverty through social security nets is a failure. Zimbabwe, despite having all the necessary land resources and ideas, is failing to do just that. We must fully utilise our land assets and limit importation of food as a priority as this saves the country millions in foreign exchange. We must also diversify our agriculture produce and invest more in exportable produce, horticulture being a sector that has been mentioned. The minister has alluded to this and intends to set up a revolving fund for agricultural exports so that we prioritise investing in produce which earns the country foreign exchange. The means of access to these funds for farmers will be the deciding factor.
On industrial production
Zimbabwe’s business sector recently complained that they have not been able to access the $18bn fund announced by the government during the COVID-19 pandemic and this puts to question the modalities which are in place in order to ease access to capital for the industrial sector. No doubt industrialisation is viewed as a priority by all but what is now key is ensuring that industry actually gets hold of long-term funding. We, therefore, need a new approach. The Industrial Development Corporation (IDCZ) needs to be capacitated to lead industrial funding, after all that is why it was created. Added to this, the Industry and Commerce ministry must play a central role in industrialisation and facilitating access to capital.
On infrastructure development
Significant work is already being done on infrastructure, particularly on the road network and the building of clinics and schools. I would, therefore, focus more on urban social infrastructure to improve the quality of life of citizens, waste management, water, sanitation and lighting so that we can at least create clean cities.
As I have a alluded to above, the IMF US$1bn windfall is not much compared to our total needs, however, it is a welcome shot in the arm that could lead to further stabilisation of the macro-economic environment. Unfortunately, the parallel market rate is now almost double the official auction rate and we need to rope that in. We have really never understood and pinpointed the root cause of its continued increase which continues to feed inflationary pressures.
It is most difficult to please everyone and meet all needs with such a small amount given what is required, but I think accountability and transparency will at least satisfy most that the funds have been utilised primarily to the benefit of citizens and that corruption will not once again rear its ugly head. Time will tell.
- Vince Musewe is an independent economist and is reachable on [email protected]
