From a vi­cious to a vir­tu­ous cy­cle

The Sunday Mail (Zimbabwe) - - COMMENT -

ABOUT a year ago, Pres­i­dent Em mer son Mnan­gagwa’s newly-minted Gov­ern­ment em­barked on the oner­ous task of lay­ing the foun­da­tion for es­tab­lish­ment of what we now com­monly re­fer to as the Se­cond Repub­lic.

The rea­sons why the First Repub­lic ul­ti­mately im­ploded are clear.

A stark dis­re­gard for eco­nomic fun­da­men­tals; the en­trench­ment of un­pro­duc­tive self-en­ti­tle­ment that it­self bred an un­wieldy, un­re­spon­sive and cor­rupt bu­reau­cracy; the emer­gence of a toxic po­lit­i­cal clique that acted with im­punity and cr ass ar­ro­gance; and a cul­ture of in­do­lence were among the most ap­par­ent viruses that felled the First Repub­lic.

It was from th­ese ashes that Pres­i­dent Mnan­gagwa has had to coax a phoenix.

To as­sist him in that mis­sion. His Gov­ern­ment — in its very early days — asked the African De­vel­op­ment Bank to con­duct an eco­nomic study of Zim­babwe to ren­der ad­vice on how best to struc­ture the Se­cond Repub­lic’ s quest to es­tab­lish an up­per mid­dle-in­come econ­omy by 2030.

The out­come of that re­quest is the com­pact but fe­cund re­port ti­tled“Build­ing a New Zim­babwe: Tar­geted poli­cies for growth and job cre­ation”, which Pres­i­dent Mnan­gagwa makes ref­er­ence to in this week’ s inst al ment of his col­umn in The Sun­day Mail. The lead au­thor, AfDB act­ing di­rec­tor( Coun­try Eco­nom­ics De­part­ment) Fer­di­nand Bako up, is quite op­ti­mistic about Zim­babwe’ s growth prospects.

The coun­try’s main as­sets, the re­port notes, are a “gen­er­ous en­dow­ment of nat­u­ral re­sources, ex­ist­ing stock of pub­lic in­fra­struc­ture, and com­par­a­tive ly skilled labour force”.

To un­lock the po­ten­tial in­her­ent in th­ese as­sets, the A fD B sug­gests a three-pronged short to medium-term strat­egy hinged on agri­cul­ture, eco-tourism and spe­cial eco­nomic zones. It sounds pretty sim­ple, be­cause it is. We have to start with the ba­sic sand build from therein sub­se­quent na­tional de­vel­op­ment plans.

For the first “prong”, head­way has al­ready been made by way of Com­mand Agri­cul­ture, and it is sig­nif­i­cant that the 2019 Na­tional Bud­get pro­poses to al­lo­cate $989,3 mil­lion for in­puts, ir­ri­gation de­vel­op­ment, me chan is at ion and other re­lated ar­eas. Zim­babwe is on the right track in terms of agri­cul­tural out­put. The next phase of in­vest­ments hould­bei na gr o-pro­cess­ing and mar­kets de­vel­op­ment.

It is some­thing that Ethiopia has learnt well, and some­thing we should learn.

At the turn of the mil­len­nium, Ethiopia was clas­si­fied as the se­cond-poorest­the world, but the A fD B an­tic­i­pate sit will at­tain mid­dle-in­come sta­tus by 2025 on the back of agri­cul­ture-led in­dus­trial is at ion.

That coun­try fo­cused on in­creased out­put and in­creased value ad­di­tion. Then they in­vested much fi­nan­cial and po­lit­i­cal cap­i­tal in de­vel­op­ing East Asian, Mid­dle East­ern and Euro­pean Union mar­ket ac­cess. If Ethiopia did it, we can also“did it ”.

We have seen that we can in­crease pro­duc­tion, so now we need to di­ver­sify that out­put, process it, and send it to mar­kets that will pay in for­eign cur­rency.

On the se­cond“prong” of eco-tourism, we have not seen enough from Gov­ern­ment and the pri­vate sec­tor in terms of de­vel­op­ing des­ti­na­tions, im­prov­ing ac­cess to them, and mar­ket­ing them to the world.

Much of the de­vel­op­ment bur­den in this area lies in the hands of the pri­vate sec­tor.

Gov­ern­ment’s im­por­tant role on this front is fa­cil­i­ta­tion and cre­ation of an en­vi­ron­ment­that al­lows pri­vate in­vest­ment to thrive in eco-tourism.

In­no­va­tion must be al­lowed to thrive. In­no­va­tion must be en­cour­aged. Pub­lic-pri­vate and pri­vate-pri­vate part­ner­ships must be forged.

Surely, it should not be that dif­fi­cult to mar­ket a des­ti­na­tion like Zim­babwe for eco-tourism, which is es­sen­tially tourism di­rected at the nat­u­ral en­vi­ron­ment and its wildlife. But this must bed one in away that the money comes to Zim­babwe; not this busi­ness of tourists pay­ing for their en­tire pack­ages in Europe or North Amer­ica to Euro­pean or North Amer­i­can agents who have Euro­pean or North Amer­i­can bank ac­counts.

On the third“prong ”, that of spe­cial eco­nomic zones, as with agri­cul­ture, Zim­bab­we­has made sig­nif­i­cant head way al­ready.

SEZs have been des­ig­nated and more shall be des­ig­nated as the in­vest­ment en­vi­ron­ment im­proves.

The 2019 Na­tional Bud­get does well to fa­cil­i­tate op­er­a­tional is at ion of the Zim­bab­weIn­vest­ment and De­vel­op­ment Agency.

What Gov­ern­ment and the pri­vate sec­tor need to do is iden­tify pri­or­ity ar­eas in which Zim­babwe has com­par­a­tive ad­van­tage for lo­cal man­u­fac­tur­ing with an eye on ex­port mar­kets.

The AfDB re­port notes that“Gov­ern­ment should pay at­ten­tion to spon­ta­neous self-dis­cov­ery by pri­vate en­ter­prises and sup­port the scal­ing up of suc­cess­ful pri­vate in­no­va­tion in new in­dus­tries”.

It con­tin­ues: “Rapid tech­no­log­i­cal change may give rise to new op­por­tu­ni­ti­esthat would not have ex­isted a decade or two ear­lier in the rapidly grow­ing com­para­tor coun­tries. Ex­am­ples in­clude mo­bile phones and re­lated e-ser­vices, so­cial me­dia, and green tech­nolo­gies.” That is what SEZs should be all about. Zim­babwe is not go­ing to de­velop by be­ing a net ex­porter of un­pro­cessed agri­cul­tural or min­ing out­put, by re­ly­ing on in­di­vid­ual for­eign­ers to stum­ble upon us as an eco-tourism des­ti­na­tion, or by con­tin­u­ingto man­u­fac­ture the goods that have lim­ited in­ter­na­tional mar­ket ap­peal.

We must iden­tify the ar­eas in agri­cul­ture,tourism and man­u­fac­tur­ing in which we have a com­par­a­tive ad­van­tage.

In a cou­ple of decades, China lev­er­aged on its hu­man and nat­u­ral re­source bases and trans­formed into a vi­able eco­nomic con­cern. Again, if China did it, we can also “did it ”. By un­leash­ing our hu­man cap­i­tal and nat­u­ral re­sources, com­bin­ing those with hon­est, hard work, while en­gag­ing and re-en­gag­ing with the in­ter­na­tional com­mu­nity, Zim­babwe can break out of the vi­cious cy­cle of poverty and break into a vir­tu­ous cy­cle of strong, sus­tain­able and shared de­vel­op­ment.

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