Economic Review: First Quarter 2018
IMAGINE if our economic sectors were Grade Seven pupils. Will their performance in the first quarter of 2018 allow them to proceed to Form 1? Non performing parastatals are bleeding Treasury and the tax payer eventually. Why not commercialise them through privatisation or have them sold to willing buyers. In the case of land, why not pay improvements compensation, do a thorough audit of the land reform and put this strategic resource back on the market. We need to spread the bankability of the 99-year leases. Our banking, insurance and micro-lending sectors need to increase confidence and trust through real saving rates and decision on cost of funds.
Inflation is now in positive territory and there is a need to watch out for this former number one enemy. Policy consistence should be consolidated especially on the ease of doing business. Elections come and go and there is no need for a wait-and-see-syndrome. Industry has to mitigate any risks. We are glad that companies that opened up shop in 2017 are still soldiering on despite the challenging environment especially for importers. With the agricultural season coming to an end we expect an upside on temporary jobs but thank God for the blessing of rains. Let us continue to conserve water and invest more in the sector just like all major sectors. As a country we need to urgently address country debt and Government should do more.
We applaud the indigenisation and empowerment policy review in light of investor interests but I am still convinced that the 30 percent compromise on indigenisation was ideal. As a country we have to be aggressive in dealing with cost drivers such as utility bills, labour costs, fuel and others. Internal devaluation is the way to go. A bold and very aggressive move to cut across our costs by at least 25 percent to increase competitiveness would be helpful. Buying power is not only increased by salary hikes but reduced cost of products/ services also does the trick.
Tobacco sales are a major foreign currency earner though indications are that the yield would be lower than last season. Command agriculture has to continue as a source of relief to farmers but we need to reduce costs of inputs and spread the model across agricultural activities. On bonuses, my view is that we make our own bonuses through careful savings just in case. Let’s continue using plastic money in view of cash challenges and also tame imports.
Zimbabweans should review their lifestyles to mitigate huge costs associated with diseases like cancer. Let us do away with talk shows on Buy Zimbabwe and implement this fully backed by consistency in policy making and implementation.
Externalisers have been named while some returned funds but the legal recourse remains a challenge. Commercial banks should shoulder the blame on some “looters”. We need to deal with all criminal activity. Another vital economic milestone is the Kazungula Bridge project and the re-engagement by Zimbabwe authorities with Namibia, Zambia and Botswana. This is a positive move to counter loss of revenues by being totally excluded. Packaging Zimbabwe will also aid tourism earnings and already figures show an upward trajectory compared to last year same time. More is needed in infrastructural development in power, water and solar technology sectors. We also have to address the pricing dilemma. Our prices are distorted heavily due to cash and RTGS prices and the multi-pricing regime. We should collectively do away with parallel market rates and weed out all forms of corruption by encouraging transparency and accountability.
China’s influence is rising in the country although other countries are also showing interest in investing in Zimbabwe. We need to use this positive sentiment to attract more foreign direct investment and increase our productivity. Sadly bond notes are still elusive on the market despite increased supply. Lithium is being touted as the next best thing in mining. The National Railways of Zimbabwe is on the path to recovery under the $400 million facility. We hope Zisco-Steel, CSC and Hwange Colliery will also come on board. There is nothing much on the stock market to talk about besides the re-correction of the bourse. The diamond sector is still in the doldrums and we need to bring to finality all outstanding issues to ensure production. Industries need retooling, working capital and low cost loans.
The need to rationalise the civil service in the economy is now loud and salary adjustments are expected due to industrial action threats. There is also a need to relook the Treasury Bills route to avoid over crowding the local market. Programmes should be initiated to empower marginalised groups like the youth and women to achieve financial inclusion. This includes formalising the small to medium enterprise sector. We also urge increased Public Private Partnership and continued use of the multi-currency regime until fundamentals are right. We can as well exploit opportunities in the bond market and operationalisation of Special Economic Zones, which are still work in progress and long overdue. In all this we desire to have a transformational leadership for production purposes.
IF YOU LIVE IN BULAWAYO PLEASE CONSERVE WATER. IF YOU LIVE IN ZIMBABWE PLEASE USE ELECTRICITY SPARINGLY SWITCH OFF SWITCHES (SOS). IF YOU LIVE ON PLANET EARTH PLEASE PRESERVE THE ENVIRONMENT
Morris Mpala is the managing director of MoB Capital Limited, a Bulawayo-headquartered micro-finance institution with footprint across the country.