Editor’s Memo

It’s recovery not growth!

By Vincent Kahiya

IN Zimbabwe’s political warren, it is oftentimes forgivable to overlook statistics provided by officialdom especially when they do not mean anything to the

politics of the stomach.

But when President Mugabe at the Heroes Acre on Monday regurgitated Finance minister Herbert Murerwa’s claims that the agriculture sector would grow by 23% this year, I felt compelled to question the veracity of this forecast.

The statements by Mugabe and Murerwa on agricultural growth are part and parcel of the spin by government which has told us that there is no crisis in Zimbabwe. In that respect therefore, there can only be positive growth.

The statements discount the fact that there has been a steep decline in production in key sectors such as agriculture, mining and manufacturing over the past six or so years.

Economist Dr Daniel Ndlela, writing in our Quoted Companies Survey in May, aptly captured the decline in the agricultural sector by bringing to the fore the low levels of maize production.

He said: “The average commercial maize crop produced in 1981-83 was 1 223 852 tonnes (communal harvest — 626 666 tonnes) this including the drought of the 1982-83 season. Twenty years later, the average 2001-03 commercial maize crop was only 199 056 tonnes — 9% of the 1981-83 period.”

Government has this year said farmers will produce 1,8 million tonnes of maize, but there is scant evidence of that, as demonstrated by the absence of maize at GMB depots. The silos are empty!

We are struggling to achieve 1982 production levels, hence any talk of growth is a jaunt into dishonesty. It should be put on record that in 2000 Zimbabwe produced two million tonnes of maize.

The so-called 23% growth — reflected by 1,8 million tonnes — is still less than our peak production level. It gets even more intriguing when we consider that Murerwa said in his mid-term fiscal policy statement that agriculture had fallen by 12,1% last year “due to delayed availability of some inputs”.

Basic calculus denotes that growth is calculated from a standpoint that the new figure reflecting expansion is larger that the previous one. When a country has experienced a 10% growth in its GDP in 12 months, it means exactly that: that the new GDP is equal to that of the previous year plus 10%.

Thus the simple mathematical formula for growth is: Growth in % = (GDP now minus GDP previous)/(GDP previous) X 100.

This simple mathematical principle can therefore not be used to calculate growth in our agriculture because we have not been told what Murerwa’s growth margin is comparative to.

Is it comparative to the peak production period prior to the disastrous years of land reform? For a government that has espoused the success of the land reform, I would like to assume that the 23% growth is comparative to last year’s production levels.

To our rulers it does not matter if production figures of last year represented less than 50% of the country’s peak production level.

If government is to be honest, it should be talking of recovery and not growth because these are two different issues which politicians love to twist to mean the same thing.

Just as an illustration, the US under Theodore Roosevelt (1933-9) experienced average growth of 5,2% during the Great Depression. This was significantly higher than Ronald Reagan’s 3,7% growth during the so-called Seven Fat Years!

This however does not necessarily mean that people had it better during the Great Depression than the Seven Fat Years. The moral of the example is that recessions and depressions matter. Often, growth is simply a return to normalcy, not an objective measure of economic health. In the case of Zimbabwe, our economy is grossly incapacitated.

So by conveniently omitting a recession here or including one there you can prove just about anything you want to prove. In the case of Zimbabwe, politicians are painstakingly trying to prove that good times are nigh because of the anticipated 23% “growth” in agriculture.

This is the mirage born out of the government’s appetite for quick-fix remedies to the crisis as evidenced by assumptions that the NEDPP — a six-month crash project — will lead to full economic recovery.

The recovery of this economy is dependent upon getting the politics right. Various studies on countries that have experienced an economic rebound have found that there is a correlation between policy adjustments and politics.

A study by economists Valerie Cerra and Sweta Chaman Saxena published in an IMF report, Growth Dynamics: The Myth of Economic Recovery, revealed that “change to a more democratic government system… improves the rebound from a recession”.

They also concluded that “recoveries are weak when the output contraction is associated with a financial crisis. Both banking crises and currency crises lead to significantly lower growth in the aftermath of a recession linked with them”.

They said “political change toward autocracy leads to weak recoveries”.

Zimbabwe is a typical example of this observation.