Diversification key to economic survival

WHILE the mining and agriculture sectors in principle offer wider and economically rewarding employment opportunities, their effects in terms of diversification are both positive and negative.

At this moment it seems that our Mines ministry has focused on the Marange diamonds and the other ministries have now relaxed thinking that a panacea has been found in Marange to address all the economic ills Zimbabwe faces.
A diamond processing/polishing centre is now being constructed and now the Indians want to invest in a diamond school. This is not a bad investment for the ailing economy but do we even know how much of these diamonds the fields hold or how long it will take to deplete the diamonds.
What is the rate of return on the investments government is making on the diamond polishing enterprises?
Besides diamonds we seem to be putting all our energy on agriculture which is creating a dual dependence. Within the agriculture sector we only think of promoting the growing of cash crops -–– foreign currency earning crops such as tobacco and cotton. We are not thinking beyond the tobacco and cotton or diamonds and platinum.
Everyone remembers what happened to Zambia in the 1980s. Their economy was based and dependent on the copper mines. When the metal price tumbled, it came down with the entire economy. I foresee a similar situation if the policy makers, particularly the Industry and Commerce ministry, do not start to strategise towards an innovative diversification of the economy.
They should move the economy away from the mainstream economic development policy as Malaysia did.
Given the right institutions and policies, developing a successful modern economy based on natural resource exports is feasible, as the examples of Australia, Canada and the Scandinavian countries demonstrate. However, there are risks associated with being highly dependent on a limited number of resource-based sectors. Therefore a more diversified economic structure is something that in principle is desirable.
Malaysia successfully industrialised and diversified its economy in the 1970s and 1980s, going from producing mainly raw materials such as rubber, palm oil, and tin to concentrating on manufacturing activities. Further transformation is ongoing because of the challenges of globalisation and they have become a major exporter of electronic finished products and electronic components.
The Industry and Commerce ministry should identify the priority economic sectors that offer the best competitive advantage to the nation.
Many developing nations seek to copy the success of other nations and want to jump onto a business bandwagon that has succeeded elsewhere. This mistake has caused many developing nations to waste scarce and valuable resources with little success. The need to investigate what will work for Zimbabwe is critical. Thus we need to benchmark Malaysia’s success story and customise it to deliver for Zimbabwe.