Economic recovery starts with doing the little things right ­— Mashakada

THE recently appointed Minister of Economic Planning and Investment Promotion, Tapiwa Mashakada, has a Herculean task to craft a national economic development strategy that is pro-poor and to attract investment for a country that has experienced a decade-long economic and political crisis.

The Zimbabwe Independent editor, Constantine Chimakure, met with the minister in the capital on Wednesday to hear his vision and plans. Below are excerpts.

Chimakure: When do we expect your ministry to come up with a national economic development strategy and what will it encompass?

Mashakada: The role of development planning is to provide the necessary trajectory and framework that is required in order to achieve sustainable growth and development. The first order of business is clearly to chart our national economic vision which will then provide the pedestal for rolling out a robust national economic development strategy.
A national economic development strategy must of necessity address issues like poverty reduction, capacity utilisation by industry, infrastructural development, resource utilisation and beneficiation, export promotion strategy and social sector balance. The list is not exhaustive. But the long and short of it is that national economic development strategy must be guided by a transformative agenda. For example, we should ask ourselves the question: what was the key plank of the East Asian miracle? Clearly, these countries chose an export-led development strategy. As a result they were able to transform their economies from developing economies to transitional economies.
The time line for implementation will depend on the consultative and galvanising process. At this stage we can only talk about the task at hand.

Chimakure: You have spoken of a pro-poor economic strategy; what is it and how can it be implemented in an economy slowly emerging from a vegetative state and in need of massive financial support from the private sector, especially foreign direct investment?

Mashakada: Building an economy from ashes is a big challenge. There is always a looming danger of neo-liberalism. Therefore, it is always important to have a conversation on our policies so that they are human-centred.
Development is about pushing off the frontiers of poverty. Zimbabwe does not need jobless growth. So, a pro-poor economic strategy ensures that economic growth can bring along with it jobs, more disposable incomes, better health, better education and better livelihoods. In other words, the principle of pro-poor growth questions the trickle down doctrine.
In this regard, my colleague, the Minister of Finance (Tendai Biti) should be commended for his pro-poor approach so far, even against a background of a shoe-string budget.

Chimakure: What measures are you putting in place for investment promotion and why are investors shunning the country?

Mashakada: Investment pundits will tell you that foreign direct investment or for that matter investment capital is timid. In the context of Zimbabwe, my view is that we have to be more serious about addressing the investment climate so that it becomes investor-friendly.

In this regard, our main focus will be centred on measures to improve investment and investment facilitation.

There are three imperatives. First, we have to establish a one-stop shop for investors — Zimbabwe’s gateway for investors. Second, we have to come up with legislative reforms around investment — an investment regulation and third, investment road shows that showcase our investment opportunities. But more importantly, Zimbabwe needs a national investment policy to guide investors.

Let me hasten to add that, when we talk about investment, that also includes domestic investment which is highly correlated with savings and other macro-economic fundamentals. In generic terms, investors are normally worried about investment promotion (bilaterally and multi-laterally), and expropriation. They also get concerned about incentives and issues relating to flexibility in licensing and registration, among a host of other best practices.

My ministry is proposing the establishment of a Foreign Investors Roundtable to periodically discuss investment barriers. I am aware that concern has been expressed regarding the protection of bilateral investments as well as economic empowerment regulations, but these are matters which the inclusive government is already seized with.
A Foreign Investors Roundtable would enable investors to channel their proposals to government so that in the end, there is continuous dialogue to address all the challenges.

Chimakure: What is your position on the laws and regulations that worry investors?

Mashakada: Laws are made by men and women and are therefore reviewed from time to time depending on the circumstances. The Indigenisation and Economic Empowerment Act should not be an exception in so far as this principle is concerned.

Chimakure: Can you give us statistics on the volume of investment into the country in the first half of the year and your end of year projections?

Mashakada: Our major statistical problem is that the inflow of investment into the country has not been coordinated. Therefore, you will be dealing with soft data which may be spurious.
This is an area which needs legislation and my ministry will propose the channelling of all investments through the Zimbabwe Revenue Authority.

In other words, the law should make it mandatory that no investor can invest in Zimbabwe without getting an investor licence from the Zimbabwe Investment Authority (ZIA).

However, in general terms, the flow of foreign direct investment has been dismal and the share of investment in gross domestic product is below 10%.

Chimakure: The World Bank Doing Business report ranks Zimbabwe on the tail-end saying it takes close to three years to set up shop in the country. How effective will the proposed one-stop concept of the ZIA speed up the process of starting a business?

Mashakada: Our target is that initially it should not take more that 10 days to get an investor licence provided the application is a complete application. Otherwise, it must eventually be a matter of hours, thanks to information communication technology. Why not? This can be achieved.

Chimakure: How different is your job from that of (Finance minister Tendai) Biti? What exactly do you do?

Mashakada: I am not here to redefine the mandates of other ministers. My job is to do economic planning and promote investment. Is it not self-evident?

Planning is not a new concept. Zimbabwe has a long tradition of economic planning. In the early 1980s we had the Growth with Equity Plan, followed by the Transitional Development Plan and then five-year plans and so on.

The role of my ministry is to set up overall socio-economic development goals and targets together with the estimated funding requirements across the whole economy in order to achieve our national vision. Therefore, planning is a cross-cutting issue. It is the architectural design of the economy, so to speak. Planning and implementation are two different things. We do co-planning with line ministries who will then do the plan implementation.

Chimakure: Let’s turn to the controversial Chiadzwa diamonds. Did Mbada Diamonds and Canadile fulfill their investment commitments to ZIA? We are made to understand that the capital they have injected falls far short of their initial commitments.

Mashakada: You seem to have the answer to your own question so why ask me a leading question? What is not in dispute is firstly the need for accountability and transparency in the sale of diamonds, which can be enhanced by the KP certification process, and secondly the issue of revenue accruing to the fiscus. In the final analysis, the diamonds must not trap Zimbabwe into a resource curse.

Chimakure: What do you think Zimbabwe should do to come out of the current economic crisis?

Mashakada: Economic recovery is a process which starts with doing the little things that are right.
Macro-economic stabilisation is a sine qua non for economic turnaround and I am glad we have achieved that. Of course we still need to achieve sustainable growth rates which will enable us as a as a nation to fend for ourselves.
The menu of policies is diverse and there cannot be a simplistic answer, otherwise I can do a whole thesis on your question.

Chimakure: How many Bilateral Investment Protection and Promotion Agreements (Bippas) have been violated over the past decade and the cost of such violations to investment?

Mashakada: We shouldn’t be talking about quantities, but principles. My view is that all Bippas must be honoured and respected. It has more to do with respecting the rule of law than anything else.
Chimakure: When is Zimbabwe going to sign a Bippa with Botswana which we understand is on the table?

Mashakada: Negotiations are still in progress.

Chimakure: How many new deals were taken on board since last year’s inaugural international investment conference?  

Mashakada: If you had delayed your question and deferred it to next week I would have been in a much better position to have gathered the facts. And I still challenge you to do that.

Chimakure: What advice are you giving to parastatals to operate efficiently and what kind of reforms do you intend to undertake on parastatals?

Mashakada: Feasibility studies and due diligence analysis have already been done in regard to parastatal reforms.
The exercise has identified parastatals which require divesture and those which do not. Some just need new capital injection while some need managerial shake-up.

So, the restructuring has been approached on a case by case basis rather than on a one-size-fits all basis. This is all I can say from a planning point of view. Further details would require the minister in charge of parastatals to proffer.

Chimakure: What is the status of the Medium Term Plan that was supposed to build on the Short Term Emergency Recovery Plan?

Mashakada: The status of the Medium Term Plan will be in the public domain at the appropriate time.