The economic war is winnable

With only two months left for the Transitional Stabilisation Programme (TSP) to run its full 27-month course, it is fair to say the bridging economic blueprint has done precisely the job that it was initially set out to accomplish to stabilise the economy.

But the word stability can be a misleadingly generic term.

For an ordinary Zimbabwean, for whom the programme was intended in the first place, the only welcome stability that would be appreciated is the assurance that their hard-earned money is not eroded wily nilly, and retains real and full value that not only has demonstrable purchasing power, but can be a store of value as well.

It means relatively stable prices of basic commodities over reasonably longer periods of time that makes budgeting realistic. And most importantly, it means the productive farmer and miner is paid a just reward for their sweat and are able to produce even more.

This is exactly what has been obtaining on the ground since the introduction of the foreign currency auction system on June 23.

While it is tempting to attribute the current stability solely on the auction system, this, however, is not the case.

What is presently happening is the overall result of bold, assertive, pragmatic and targeted policies that began well before October 2018.

It began with the strict observance of the public finance management system through discipline in handling public finances and being accountable.

It began with the currency reforms which, because of the upheavals they caused in the market, were naively resisted by some quarters, including restoring discipline in financial markets, particularly in the mobile money services sector.

While these interventions attracted an avalanche of criticism, most of it unfair and ill-advised, the chatter has since died down as success has become notable.

As President Mnangagwa has often said, leadership is not about taking people where they want but where they ought to be.

Admittedly, the reforms came with a considerable amount of pain.

In fact, they came with a lot of pain.

It was indeed the chemotherapy that was badly needed to treat the cancerous growth in the economy. To overcome, in unfortunate succession, the deleterious impact of Cyclone Idai, the worst drought in Sub-Saharan Africa in four decades, and dealing with the fallout from Covid-19 while at the same time keeping the population fed, including undertaking massive infrastructure programmes in roads, dams, etcetera, particularly even without the pretence of support from international finance institutions, is nothing short of an almost miraculous feat.

Obviously, we cannot forget the extra burden of the two-decade-old sanctions.

All this was made possible by the ability to plan, and to plan well.

The 2021 Budget, which will naturally feed off the first five-year National Development Plan (NDP) (2021-2025), is crucially important in consolidating the gains made thus far and positioning the country for economic take-off.

The 2021 pre-budget paper, which was launched by Finance and Economic Development Minister Professor Mthuli Ncube on Friday, is already encouraging.

Running under the theme “Building Resilience and Recovery Post Covid-19”, the paper envisages the economy will grow by 7,4 percent next year after a forecast 4,5 percent decline this year.

The performance is premised on growth in manufacturing, agriculture and mining of 6,4 percent, 11,3 percent and 11 percent respectively.

This obviously comes with increased economy activity and, by extension, jobs.

It is quite apparent that the solution to sustainably growing the local economy lies in three things production, production and production.

This is the silver bullet that can change the vicious circle of low production, waning economic activity, foreign currency shortages and joblessness into a virtuous circle of high production, burgeoning economic activity and decent jobs.

Successor economic plans, including the 2021 Budget, should therefore consolidate and build on the solid foundations that have been created so far.

Thanks to the determined and sterling work by Government, this year the country will be harvesting an estimated nine months’ supply of wheat, which will not only save the country a fortune, but guarantee affordable bread supplies.

It will put more money in farmers’ pockets. Suffice to say, it becomes urgent to come up with an effective plan to build on this remarkable progress to decisively eliminate wheat imports.

Similar plans are required for maize and many other crops that the country can ordinarily grow for itself.

Quite clearly, import substitution would mean more raw materials for industry and foreign currency savings, which ultimately would “build resilience” of the Zimbabwe dollar. But this would mean Treasury would have to support the resuscitation of irrigation infrastructure around the country through leveraging on local companies that are able to do the job.

There is need to plug the costly leakages of valuable minerals, particularly gold, in the mining sector to maximise foreign currency generation and build local reserves.

That the country could be losing more than US$100 million of gold every month should be a serious cause for concern.

However, most encouragingly, various Government projects are beginning to have a positively telling effect for industry.

Reports on Masimba Construction’s big order book owing to ongoing civil construction works around the country, including reports of recovering volumes at cement manufacturers, among others, clearly show the green shoots of recovery and growth.

All that Zimbabwe needs to do is to double down on reforms. The first battle has been won and the war is winnable.

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