Frankly, let it be with uttermost good faith

Good news 1: President Mnangagwa has offered to engage business representatives this morning. Good news 2: he is a listening President. Unfortunately good news is scarce these days, which is perhaps why the President wants to meet business; to find out what is going on, and also what they think needs to be done. We pray the discussions will be conducted in uttermost good faith.

October 2018 was particularly bad for the ordinary Zimbabwean and we write this editorial in the hope that today’s meeting between the President and business at State House will be a time for truth-telling about the state of the economy and what needs to be done. It should be a meeting for honest talk and introspection on both sides.

From where we stand, there is too much politics in this country. Then there is too little economy and economics. So we shall eschew the politics.

The four biggest challenges we face at the moment are the use of the American dollar as a transactional currency; too much consumption without production and high Government expenditure and debt. These are the demons we have to confront. Corruption, while a serious issue, is only a symptom of a festering soul.

We start with Government expenditure. It is a fact acknowledged by Government itself that about 90 percent of revenue goes into recurrent expenditure. Thankfully, Finance and Economic Development Minister Mthuli Ncube has already raised the flag on this and appears to have the ear of the Head of State.

So far Presidential travels and retinues have been cut to the bone. That’s a good starting point. We don’t expect massive retrenchments of the civil service overnight. These are human beings with families and other responsibilities.

The law of attrition should take care of that where posts are no longer necessary. Then the bitter tax pill administered, also in October, should help cure the public debt in the long-term.

Business can discuss these with the President without acrimony.

Let’s come to productivity. We are not producing as a country. This is something industry and business should tell the President and explain why. In 2016, Government introduced Statutory Instrument 64 (which became SI122 last year). Both were in response to an appeal by the private sector for protection from imported goods.

So imports of certain goods were banned to allow local companies to retool and raise productivity. It was made clear from the beginning that this was a temporary measure, not a permanent shelter to protect the slothful. (We are not sure if any targets were set to be met by industry as part of the bargain.)

We know for its part Government would be happy to see industry firing on all cylinders to create jobs for youths graduating every day. But for reasons we believe business will explain to the President today, October showed we were living a lie.

Overnight, starting with fuel, everything was in short supply, including basic foodstuffs. (No need to stress that this is always a serious national security threat.) Business did not show that it was prepared to meet the demand, and besides blaming Government, the bond note and a shortage of foreign currency, there was no sign that industry had benefited from both SI64 and SI122.

If anything, there were all the indications that industry was complicit in the shortages occasioned by panic buying and wanted this to go political. Between manufacturers and retailers, goods were being supplied in dribs and drabs while there was a sustained upward momentum on prices. Government was forced to suspend SI122 to avert an explosive crisis.

We won’t call it sabotage. Business representatives have been offered a platform to explain better what is going on.

Linked to lack of productivity to meet local demand and compete externally is use of the US dollar as a transactional currency, which consumers also keep at home as a store of value due to both lack of confidence and incentives in the banking sector. Both Government and the private sector are scared to confront this currency monster.

So long as the situation remains as is, we are afraid to say we are stuck, and the rand is only a cowardly, temporary escape route. We can never produce and export competitively using the American currency. It gives us too much power to be a consumption economy, not producers. That means we will never raise enough reserves to meet so-called fundamentals before we can have our own currency.

That is why issues of productivity, foreign currency shortages, bond note and higher exports have become a vicious circle. Which one must be resolved first? How? By who?

Let the talks begin. Let’s have the truth, nothing, but the truth.