Exports essential to revitalise economy
HE government’s gross mismanagement over the last seven years has brought the Zimbabwe economy to its very knees. An overwhelming majority of the employable population is unemployed. Three-quarters of the population barely subsists, at levels below the poverty datum line, while the poverty of almost half of the population is so great that starvation, malnutrition, misery and potential ill-health is the order of the day.
Deprivation is symptomatic of daily life for many, be it lack of food, accommodation, health care, transportation or other recognised basic essentials of daily life.These are but a few of the characteristics of a distressed Zimbabwean economy. Others include a national debt of such proportions that the prospects of it reducing to manageable, serviceable levels are almost remote, unless Zimbabwe would have its burden of indebtedness alleviated by debt forgiveness.
But the likelihood of such international largesse is unlikely in the extreme, for so long as Zimbabwe continues to be abrasive and contemptuous towards a large portion of the international community.
It adopts that stance against many that would befriend Zimbabwe, because they have the temerity to disagree with the government’s failure to respect human rights, its deliberate rejection of the fundamentals of law and order, its resistance to the essential principles of democracy and its pronounced discrimination against racial and ethnic minorities.
It also rejects the friendships that could prevail because it is too immature and small-minded to accept well-intentioned criticism and advice voiced by almost all of the countries of the world other than those which either are governed by persons of like mind or who perceive a need for sub-Saharan Africa unity notwithstanding some marked differences in perceptions as to good and sound governance.The characteristics of the Zimbabwean economy also include devastating levels of inflation which continuously erode the straitened purchasing power of consumers.
Although the Reserve Bank of Zimbabwe governor Gideon Gono can justly take pride in being the principal catalyst in lowering the annual rate of inflation from 622,8% in January to 448,8% in May, the continuing hyperinflation demonstrates the appalling state of the economy.
Reversal of Zimbabwe’s sorry economic state remains possible, although only over a very extended time. The foremost requirement for economic wellbeing to be restored is political change, be that change one of a different government coming to power or one of a transformation in the policies and actions of the present government.
It matters not whether there be a new government or that the present one continues, provided that the policies and actions be constructive and just, founded upon the restoration of good governance, reinstatement of justice, law and order, effective economic measures and reconciliation with the international community as a whole.As urgently as such political change needs to be pursued, some specific immediate measures can, at least, slow down the economic decline, thereby giving more time for the overdue political changes to materialise. That this is so has already been demonstrated by Gono who, notwithstanding that he does not control fiscal policies and cannot dictate and enforce required political changes, has used monetary policies — which he can formulate and control — to retard the pace of economic collapse.
In a remarkably short period of time he has taken actions which by May 2004 had reduced the rate of inflation by almost 28%, and which have improved the extent of foreign exchange needed by the economy. He has also put firmly in train measures needed to assure financial sector stability and security.Despite the fact that Gono’s monetary policies have partially curtailed operations in unlawful foreign currency exchange markets, thereby making more foreign currency available for legitimate purposes, Zimbabwe is still desperately short of hard currencies. It does not generate sufficient foreign exchange to fund importation of industrial raw materials, spares and consumables, agricultural and mining industry operational requirements.
In normal circumstances, much of the required foreign exchange would be forthcoming from donor states, and from international bodies such as the International Monetary Fund and the World Bank, until such time as Zimbabwe has self-sufficiency.
But that is not so when Zimbabwe not only does not honour its obligations by servicing its debts, but also does nought but malign those donors and Bretton Woods’ institutions, flinging endless vitriol and vile aspersions against them, deludes itself that it does not need those elements of the international community, and is so tardy in formulating and implementing necessary economic policies for a sound economy to develop to an extent that dependency upon the international community will progressively diminish, and ultimately cease.
In the meanwhile, pending the requisite political changes — whether by way of a change of government, or a change in the government’s policies, attitudes and actions — Zimbabwe must do whatsoever may be possible to increase the availability of foreign exchange, for it is a primary element of the lifeblood necessary to keep Zimbabwe alive.
Foremost in doing so must be to achieve a radical growth in Zimbabwe’s export performance. Not only will increased export performance yield invaluable foreign currencies, but such performance can create opportunities for greater employment, and can result in considerable economic growth as a result of increased spending by exporters downstream into the economy. Greater export volumes result in more capacity utilisation, and increased productivity is a major catalyst for inflation reduction, as does exchange rate stability brought about by greater availability of foreign exchange.
However, a great deal is required for Zimbabwe to successfully increase its exports. Ideally, agriculture needs to be restored to its former glory as the foundation of the economy, by simultaneously bringing back to the land those vested with decades of experience in viable commercial farming and enablement of new farmers to become similarly productive.
Mining must be aided to reopen closed mines by assuring the miners of profitability through application of realistic exchange rates, and operational cost stability.
Tourism must be strongly supported with internationally demonstrable safety and security for tourists, a welcoming infrastructure and attitudes of officialdom and border posts, effective and reliable transport facilities within Zimbabwe, and domestic and international communications which work!
Likewise, much is needed for the manufacturing sector to attain a restoration of past export performance and rapid development of greater export operations. To achieve all that will not be an easy task. The needs to make Zimbabwe a major, successful export country are extremely great, and very diverse.
They include an exchange rate regime which renders exports viable to the exporter and price-competitive in export markets. That necessitates that present rates must be moved substantially, for very few exporters can survive on a blended exchange rate of marginally more than $4 200 to US$1.
Most need at least $5 000 to US$1, and many need more. And the exchange rate must move consistently to maintain purchasing power parity.
Other needs for Zimbabwe to regain its former export levels, and to build upon them, include elimination of bureaucratic hindrances to export operations, meaningful export incentives which are not merely tax-based, and which are forthcoming timeously when still of value. They include a widening of the Export Processing Zone’s concept to include existing enterprises, and to enable partial exporters to operate in the zones, and benefit therefrom.
Today, at the Harare International Conference Centre, and again next Thursday at the Bulawayo Holiday Inn Conference Centre, present, past and would-be exporters have the opportunity of voicing their needs and thereby assist in formulation of a positive national export strategy. Their input will be invaluable, as will be their motivation to implement the national export strategy once it has been formulated.