HomeBusiness DigestEric Bloch: No Single Cure for Economic ills

BancABC bullish after solid results

QUESTIONS recurrently posed to economists, financial and business gurus, and others believed (frequently unjustifiably so) to know the necessary cures for Zimbabwe’s prolonged economic ills are very diversified and wideranging, including –– amongst innumerable others:

  • Will the land audit restore viability to agriculture, and thereby bring back a thriving economy?
  • Can mining sector development be the source of economic recovery and growth?
  • Is revitalisation of the manufacturing sector the key to achieving Zimbabwean economic wellbeing?
  • Should the South African rand, or the US dollar, not be Zimbabwe’s national currency, so that the economy will not be distorted by currency cross-rates or, if the former, so that the South African economy will be the catalyst of economic transformation in Zimbabwe?
  • Is a change of government key to bringing about a thriving economy?
  • If corruption would be vigorously contained, will that not trigger the creation of a viable economy?
  • Must the national debt not be eliminated, by international debt forgiveness, thereby assuring economic recovery?
  • Surely reduction of governmental spending would bring about a stable and sound economy?
  • Can economic metamorphosis not be achieved by innovative taxation measures?
  • International aid and investment is surely the key to bringing about an economy of real strength and solidity?

and innumerable other questions in similar vein.  The key characteristic of almost every question is an implied suggestion that a single policy, and associated actions, is the prerequisite for an economy which will sustain and support all (or, at least, a substantial majority of the Zimbabwean population).

However, those who so question, and thereby imply that need, are imbued with grievous misconception of the economic realities. There is no single cure for the intense economic ills that have afflicted Zimbabwe for most of the last three decades, and especially so since late 1997.

It was then that the economy commenced its horrendously escalating and accelerating downward slide. It is the last 12 years that witnessed Zimbabwe consistently, and with ever greater intensity, doing virtually anything and everything that could assure the continuing and recurrently worsening of the economy. So great was the economic destruction that:

 

  • More than four-fifths of the populace were struggling to survive at levels far below the Poverty Datum Line;
  • Over half the population were under-

nourished, victims of pronounced malnutrition, their incomes being markedly less than the Food Datum Line;

  • Millions of Zimbabweans, and particularly those with skills,  departed Zimbabwe to pursue survival in more accommodating economies;
  • National infrastructure, including education, health, energy-generation, water conservation, purification and distribution, communication and transportation services, and very much else, progressively declined to abysmally low levels, exacerbating the economic collapse and nationwide suffering;
  • Government became bankrupt;
  • Unemployment became extremely pronounced, with growth in crime becoming the ever-greater key to human survival;
  • Foreign Direct Investment (FDI) and domestic investment became virtually extinct;
  • Zimbabwe’s international ratings became so minscule that it was perceived to be amongst the world’s worst economies, and least desirable investment destinations, and devoid of any credible credit rating;

And innumerable other characteristics of a defunct, moribund, collapsed and destroyed economy.

But the questioners who pose, endlessly, the enquiries as to whether one action or another would not halt and reverse the economic morass misguide themselves, and others, when they impliedly suggest, through their questions, that there is a key course of action to be pursued to reverse Zimbabwe’s economic ills, and set the economy upon a meaningful growth path.

The reality is that a composite of actions, measures and policies must be unreservedly applied to bring about the anxiously-desired economic transformation. Key amongst these are that:

  • Zimbabwe must meet the criteria upon which FDI and domestic investment are founded, which include assured investment security, partially evidenced by unmitigated respect for, and adherence to Bilateral Investment Promotion and Protection Agreements  and for rule of law, respect for property and human rights, and for international norms of justice, and include a minimum of economic regulation, conducive taxation legislation, and realistically manageable levels of international debt;
  • Indigenisation and economic empowerment must be pursued constructively and facilitatively, rather than by expropriation, dictate, and non-indigenous subordination;
  • Agriculture must be restored to its former glory, the first step thereto being reform of land reform, ensuring land ownership by farmers, procuring effective land utilisation, timeous availability of inputs, skills

development, market-driven fair prices, and the like;

  • Mining, manufacturing and tourism must be encouraged and facilitated, with minimal state regulation and interference;
  • Political stability and integrity must be assured;
  • Infrastructural rehabilitation and development must be urgently implemented and continued, mainly achieved by partial or total privatisation of parastatals, and constructive interaction with strategic partners;
  • Zimbabwe must achieve restored, sound, reciprocally-respect based, international relations, abandoning its arrogance and psychotic misconceptions of Machiavellian intents of the international community;
  • Misplaced arrogance and pride must be replaced by seeking debt rescheduling and debt forgiveness, through avenues such as HIPC (Heavily Indebted Poor Countries’ conventions);

Simultaneous recourse to all these cures, and others, will bring about the Zimbabwean economy so yearned for by the Zimbabwean people. Focus upon any single cure is misguided and will be ineffectual.

 

Eric Bloch

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