New Zimbabwe.com

Of sacrifices and steps to economic growth

TIME and again when one listens to budding entrepreneurs making a pitch for their projects, a familiar line is “if only we had the financial capital, equipment or that technology…..we could deliver a world class service/product”.
While it is good to dream, it is also important to know that creativity and making some painful sacrifices often bring the dream to reality.
Pragmatism not only involves taking practical measures that promote and accelerate economic growth, but it also means making sacrifices during lean economic periods, starting with the leadership. That’s what President Vladimir Putin of Russia demonstrated when he approved salary cuts of government ministers including his own. This is what President Robert Mugabe has so far failed to demonstrate as the government grapples with a bloated expenditure.
Despite his country being one of the few on the planet with a large economy that is growing at above 7%, China’s President Xi Jinping wasted no time in chopping off the fat by putting caps on salaries of government officials and state-owned enterprises’ chiefs and launching a crackdown on corrupt government officials. That is leadership. And yet these are far bigger economies which are in a far better situation than ours.
Now, the reversal of an earlier prudent decision to stop bonus payments shows how entrenched government’s incapacity to rein in the bloated expenditure is. This attempt to appear populist is void of economic sense or vision. It is no secret that government coffers cannot sustain the bloated civil service’s wage bill given the shrunken tax revenue base. And yet the presidency sees it fit in its wisdom to prioritize bonus payments when there is no money to, for example, pay farmers for the maize delivered to the Grain Marketing Board (GMB) or to build critical infrastructure. Talk of voodoo economics at play. The fortunate thing however, is that our government cannot print the US dollar.
Despite the measured success associated with government’s empowerment programmes, failure to prudently manage the economy and achieve robust and sustained economic growth has long been the Achilles heel of President Mugabe’s administration. While spin doctors would like us to believe that various challenges including sanctions, floods, drought, lightning, armyworm and saboteurs among other scapegoats are reasons behind the poor economic performance, what they forget is that challenges are always there to bring the best performance out of us and not the best excuses for non-performance.Advertisement

The economy is not performing and sacrifices should start at the top with, for example, foregoing bonuses by the president and his cabinet. In fact a permanent solution lies in a lean and efficient government administration. This can only be achieved by boldly reducing the size of the bloated cabinet and then descending to government departments. While doing that, economic policies should be reviewed and improved to better attract both local and foreign direct investments that create employment and expand the tax base.
Aiming at the right target with precision when addressing problems is important if the problem is to be eliminated or curtailed. Take, for example, how corruption is often dealt with. The habit has been to parade on newspaper front pages some unfortunate scapegoats and pickpocket equivalents, who are then incarcerated while the real dons and embezzlers-in-chief, at best, only get dismissed from political parties and at worst, get promoted to higher echelons. This is a misdirected response to corruption that many African governments often opt for.
We have to think in very fundamental ways about how we should move forward with economic advancement or ZimAsset. The familiar empowerment rhetoric or the frequent media blitz on the heroic liberation history is not going to appease a dire economic situation. We should be pragmatic in our politics and policies and start calling a spade a spade, but always with the country’s long term well-being at heart. We’re going to need to make decisions that make economic sense. We should invest in infrastructure and productive sectors.
The indigenization policy efforts should not be synonymous with de-industrialization. There is need therefore to be flexible enough to allow significant investments. We should be prepared to initially permit lower indigenous ownership percentage, as our people will need to go through the learning curve in some key industries.
We have invested well in education but we cannot sustain quality standards at many public tertiary educational institutions due to financial constraints. Without promoting industrialization to make use of the young graduates that our tertiary and vocational educational institutions are churning out, we will remain a human capital supplier of other countries. We need to attract investments in industries that create jobs for our youths to gain work experience, than to expect them to set up thriving businesses when they are just fresh from college.
It appears there is some disconnect between government and a majority of our most talented and successful people in the fields of business, economics, science and technology – mainly due to government’s arrogant attitude of the past. As a result, government lost an opportunity to get top drawer, bold and sound economic advice a long time ago. This may in part explain why as a country, we have performed dismally on the economic advancement front.
Meanwhile most of these talented people in the mentioned fields are the top guns that are helping drive economies of other countries leaving this country at the mercy of lawyers, political scientists and security chiefs who have inadvertently become economic advisors to a rather idealistic presidency. However shrewd some of these advisors may appear, their areas of expertise – which are not economics, business or science and technology – carry the day in the end. Consequently, politics has always outgunned business and economics to the severe detriment of our economic advancement efforts. For us to move forward, this trend must end.
State-led capitalism requires a pro-active government that plays a critical role in promoting local businesses as well as trade and investment while making use of private sector talent in formulating and implementing economic policies. This is the preferred route. The empowerment drive has to move a gear up by translating into a drive for radical economic transformation. After studying how the Asian Tigers and China rose from economic ashes, what we should be seized with is making sacrifices and taking concrete steps to advance our own economy. With a radical economic transformation mindset, there is no room for sluggards, incompetence or corrupt practices as it is driven by a strong vision.
What the leadership needs to understand is that the liberation war history is best articulated to future generations when it’s part of the history curricula in schools. And while due recognition goes to the visionaries and heroes of that struggle, the fact is, the role they played is now history, a cherished one for that matter.
Now, moving forward demands a vision that relates to the future and this has to do with raising people’s standards of living through economic advancement. Key to this would include fiscal discipline, investment in public-sector infrastructure i.e. roads, rail, pipelines, power plants, hospitals, communication and digital infrastructure (broadband), among others. Business friendly economic policies, good governance and support of small and medium-sized enterprises through provision of affordable loans are critical.
These are the fundamental issues which require our best efforts in order to give this economy the ‘escape velocity’ necessary to launch it on a robust emergent economy trajectory. Economic growth is the only way to expand economic opportunities for us all and it entails making sacrifices – starting from the top.
Noel T Ngangira writes in his personal capacity and can be contacted at ntngangira@gmail.com