Macro-economic stability facade

By Newsday | Dec. 1, 2021 | 4 Min read

Your Excellency, there is no doubt that sustainable economic and social development can only happen in a stable macro-economic environment. For the avoidance of doubt, macro-economic stability is the absence of currency fluctuations, high debt burden and runaway inflation which can result in an economic crisis and collapse in GDP.

Vince Musewe

DEAR President Emmerson Mnangagwa.

It also includes minimising economic vulnerability from external shocks and the pursuit of consistent well thought-out economic policies which engender predictability and allow effective economic planning and growth.

Fiscal and monetary discipline, as well as a sustainable balance of payments position are, therefore, key.

Your Excellency, our economy continues to face a number of challenges which include the COVID-19 pandemic, erratic supply of key enablers such as electricity and water, deficiencies in delivery of social and other public services, slow implementation of value addition initiatives, the evident failure to transform State enterprises and resurgence of inflationary pressure driven by the ever-increasing US dollar rate and political developments which erode confidence.

This is exacerbated by the fact that we remain highly dependent and, therefore, vulnerable to exogenous shocks such as the pricing and demand of primary commodities on the international markets.

On the socio-economic side, increasing poverty levels, lack of comprehensive and effective social protection for vulnerable citizens, a continued decline in purchasing power or disposable incomes, high taxation of individuals, an inability to deliver social services such as health, education and public infrastructure, lack of jobs will continue to cause discomfort and a deteriorating quality of life for many.

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The fundamental conundrum is that despite the claim of macro-economic stability by policymakers, there is no tangible positive social impact.

Growth or macro stability without job creation, an improvement in disposable incomes and a better quality of life for citizens does not help anyone and leads to scepticism in the integrity and sincerity of the economic narrative promoted by policymakers.

This further erodes confidence in the capability of leadership to deliver. That is exactly where we are.

A quantitative analysis of the 2022 budget reflects an improving picture especially with regards to projected growth and inflation figures, fiscal discipline, effective deficit management and the clear reduction in wasteful government expenditure.

But these are of no use if citizens cannot “feel” the change in their lives and experience their conditions improving.

Unfortunately, a qualitative analysis of the budget reflects a government that is failing to understand and appreciate that our economy is failing to meet the expectations, needs and aspirations of many.

Facts on the ground are that many citizens are struggling to make ends meet due to incessant price increases and their inability to generate decent incomes to meet food, medical, education and communication costs.

Many citizens are unable to afford any luxuries at all and life is hard and not getting any better.

Many citizens feel they are being unfairly taxed and are fed up with non-delivery of essential social services such as water, waste collection and decent public transport.

Citizens are struggling with school fees, medical costs and data costs which continually increase.

They are failing to get the decent jobs they want and are being forced by circumstances to find piece jobs while most have become informal traders selling whatever they can to whomever they can to survive.

Your Excellency, our youths are lost and despondent and have resorted to drugs and alcohol as an escape mechanism from the tragedies of unemployment and a future without potential to improve.

Many of our young citizens are leaving the country at the first opportunity to seek a better life elsewhere.

Your Excellency, citizens are fed up with the claim by policymakers that things are getting better and have lost confidence in their ability to turn things around. Poverty levels are increasing while robberies, financial scams and abuse are on the rise and these are indications of a desolate society. Urban decay is on the rise due to overcrowding, poor infrastructure and dwindling incomes. That is the true picture we cannot deny.

In the business sector, entrepreneurs, SMMEs, corporates continue to struggle to make profit. They are unable to plan ahead because of the unpredictability of costs.

They have no confidence in the local currency and always seek the US dollar and price their goods accordingly. They use parallel market rates because that is where they source their foreign exchange on time.

Your Excellency, companies are facing viability problems and are closing shop simply because it is not easy to do business and it is costly. Investment is not attractive to many due to uncertainty both at policy level and at the political front. In fact many prefer a dollarised economy as they believe that it can bring some stability.

These to me are the realities that the Finance minister needs to understand appreciate and respond to at policy level. Yes we have successfully dealt with the deficit but it is meaningless to millions of struggling citizens out there.

In my opinion urgent matters which can have an immediate social impact on citizens and their quality of life include investing heavily in job creation projects, repairing public social infrastructure, opening up the public transport sector, fixing the health sector, protecting the poor and vulnerable through cash transfers, dealing with youth drug and alcohol abuse, reducing taxes on individuals and allowing the economy sector to dollarise.

That would require a people-centred budget, wouldn’t it?

Your Excellency, this is the time for our policymakers to realise that the economy has become complex and dynamic and does not conform to traditional neo-classical economics.

We need a new understanding and a new thinking that appreciates that without quantifiable positive tangible social impact, the national budget is sterile in shaping the lives of citizens.

In fact many people hardly believe in it and all they want are the basics for day-to-day living to be put in place.

I thank you.