Leveraging structural transformation for sustainable economic growth

ZIMBABWE’S economic growth experience has not been sufficient to pull the country out of the economic doldrums of 2008, notwithstanding the significant economic rebound over the period 2009-2012. This is partly because far too many of the years, Zimbabwe’s economy has depended on the production and export of primary commodities, that is, minerals and agricultural commodities such as tobacco. As a result, and indeed, far too many of Zimbabwe’s population remains in the grip of unrelenting hunger and poverty. The global perception of Zimbabwe continues in many a potential external investor to be one of a country beset by crisis and a risky place for making investments or investment destination.

There are several ways in which structural transformation can be defined, but the sense in which I am using the concept here is the “large scale transfer of resources from one sector to another due to changes in economic fundamentals and policies over years”. In an empirical sense, structural transformation means a significant change in the sectoral composition of the country’s Gross Domestic Production with the share of the primary sector in employment and output shifting to industry and modern services. It also implies a greater use of technology and increased productivity across the economic sectors of a country.

Zimbabwe desires structural transformation and industrialisation is indispensable to this objective. Industrialisation would help to generate employment, increase incomes and enable diversification, including increased exports that the country so desperately needs right now. This is evident from the experience of other countries such as Singapore, Malaysia, China, just to mention a few. Zimbabwe has not attempted any meaningful industrialisation so far, unlike other countries in Africa. In the 1960s and 1970s, some newly-independent African countries emulated other regions of the world in undertaking import-substituting industrialisation. This indeed did lead to some remarkable progress and success but ultimately stymied by the limits of the model and the global political economy. This is why Zimbabwe must today also be mindful of the current global context and trends.

In this regard, one approach with prospects for successful structural transformation is commodity-based industrialisation. Thus, rather than exerting energies on trying to diversify away from commodities, Zimbabwe should focus more on using commodities as effective drivers of structural industrial transformation. In addition to the broader benefits of industrialisation in general, a commodity-based approach offers immediate scope for value addition and beneficiation and plenty of opportunity for exploiting forward and backward linkages that can even set the investment tone of the proposed Special Economic Zones. Given the dominance of global value chains and intense cost competition in the trade in manufacturing, Zimbabwe could gain entry into the industrial sector using its huge commodity and natural resources base that it is endowered with as a comparative advantage. The fact that agroprocessing is already one of the most developed manufacturing sectors in the continent’s other countries such as South Africa is proof enough that this approach can work for Zimbabwe as well. Zimbabwe has to go back to the preland redistribution agro-production levels and more.

What then needs to be done to bring about structural transformation in Zimbabwe?

The starting point in my view is for a leadership will in all relevant governance structures, be it economic, private or public, that would provide a clear vision and direction that would mobilise all sectors of society behind this development imperative. Zimbabwe should change its approaches, people’s attitudes, and priorities. Zimbabwe should nurture a highly entrepreneurial, educated, healthy and skilled population that can imbibe the technology and build the infrastructure which is indispensable for progress and development. Particularly our Government would need to strengthen the bureaucratic capacity to undertake dynamic long-term planning and the co-ordination of the newly found economic trajectory.

Zimbabwe’s structural transformation would require a lot of funding. For finance, the country would have to pay more attention to domestic resource mobilisation, especially from the mining sector, while on the other hand accelerating the pace of regional integration to reap greater economies of scale. Zimbabwe would increasingly require more robust data and better statistical systems in order to better measure and monitor the progress on the structural transformation. Indeed, the push for this structural transformation would require that the country leverages and make better use of its human capital strengths and enable all sectors of society, particularly women and youth to fulfill their role as critical players and pillar in this structural transformation agenda.

Our structural transformation’s objective going forward should be to work closely with all the relevant stakeholders, and this time around not leaving out the country’s tertiary institutions, particularly universities, to achieve the country’s transformation agenda. There is a need to amend the Private, Public Partnership (PPP) adage to include in the matrix tertiary institutions. Universities would undertake rigorous analytical thinking in areas of knowledge creation through research for example, where their researches should make a difference. Universities should support other stakeholders in their efforts to implement growth oriented macro-economic policies, and to restore development planning.This should be underpinned by the generation of high-quality data using the latest technologies, including mobile and Geographic Information Systems (GIS).

Structural transformation’s mantra going forward should be “Zimbabwe’s first”. By this I mean that we should put the interests of our country first in all that we do.It also means that we would have to address emerging and other issues from the lens of their impact on Zimbabwe our mother land. We would have to drive the process of structural transformation on the basis of our own vision and priorities. We would have to tell our own story and for this we would have to generate our own legitimate and accurate data and statistics. This approach would define our partnerships across the board as we seek to promote coherence and deepen the impact of our work and effort towards this common goal. The time for action is now and if we do not take immediate steps, this window of opportunity may be lost for the future generation, only to curse us.

In conclusion, however, achieving success in this regard would not be easy. It would require innovation and the determination to overcome infrastructural deficiencies.It would require robust knowledge base of industry structure and global value chains. Indeed, our economy must continuously invest in knowledge, skills, technology and innovation. As I alluded above, this is the role our universities would have to actively play. The trading landscape including barriers and preferences would have to be well understood. Above all, boosting regional and intra-Africa trade would remain imperative for creating the markets needed for successful structural industrialisation transformation.

Dr Bongani Ngwenya is a Bulawayobased economist and senior lecturer at Solusi University’s Post Graduate School of Business.

ngwenyab@solusi.ac.zw/ nbongani@gmail. com