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Biti attempts the impossible

LAST week the Minister of Finance, Tendai Biti tabled Zimbabwe’s 2013 national budget to parliament, the fourth one since the so-called “inclusive government” was formed in 2009.

Opinion by Eric Bloch

In doing so he was confronted with a near impossible task, for the entire nation craved for a budget that would transform a struggling economy into a strong one, easing most of the populace’s pronounced poverty and other hardships.

Biti had to try to achieve that transformation whilst his hands were, to all intents and purposes, handcuffed behind his back, his feet heavily shackled with leg-irons, and his blood-flow constricted with an overly tight tourniquet.

All these immobilisers were to a major extent not of his making, but of the political divide entrenched in Zimbabwe, exacerbated by the innumerable policies which hinder substantive recovery of the economy.

Compounding the inability to stimulate desperately-needed economic changes are the counterproductive political statements and actions of some of the partners in the inclusive government, and the excessive and misplaced expenditures of several governmental ministries.

This is reinforced by non-democratic statements in support of former ruling party Zanu PF by the security sector. The harsh reality is that there continues to be immense hindrances to any real economic well-being, so at best only marginal economic recovery can be attained.

Biti deserves commendation for unhesitatingly identifying some of the numerous obstacles to achieving economic recovery that could readily be achieved, were it not for those hindrances. In particular, after making a general but factual statement, he unreservedly focused on some of the impediments to economic well-being.

Early on in his speech Biti said the last four years had been “an incredible journey mired with hurdles, challenges, false starts, cul de sacs and all kinds of potholes.” He added: “To put it simply, it has been an exceptionally difficult, trying and tiring period.”

He amplified thereon, saying Zimbabwe had “meandered along a maze of insurmountable challenges centred on an isolated economy, without any fiscal legroom, with weak capacity, huge levels of poverty, debt and infrastructural decay”.

He further emphasised the economic harm inflicted on Zimbabwe and its people by “the pursuit of programmes and ideologies of exclusion, deligitimisation, predatoriness, patronage, clientelism, self-seeking, and violence”, which had “led to poverty, under-development, enclave mentality and disintegration”.

Biti highlighted that despite the commendable halt to the country’s worst hyperinflation, the worst in the world ever, Zimbabwe experienced marginal economic growth between 2009 and 2011. That “economic rebound clearly decelerated in 2012, plunging the economy into … a long winter of despair, characterised by low business and investor confidence, some disequilibrium in the economy, little growth and employment, declining social indicators and a generally lackadaisical business-as-usual mentality”.

Biti drew attention to the many constraints on the economy, including erratic electricity supply, tight liquidity, fiscal revenue underperformance, drought and continued de-industrialisation.

Moreover, he intimated “the 2013 outlook bleak, blighted by a miscellany of factors that include a deeper global outturn, the continued capital deficit, financial sector instability, a poor business climate, and other challenges”. Moreover, depressingly but very correctly, he said “the fact of the matter is that we have not entered into a sustainable path to recovery and, most regrettably, is the overwhelming evidence of stagnation”.

Summing up his sadly correct evaluation of Zimbabwe’s economic circumstances, he stated that “the sub-optimal equilibrium fuelled by low aggregate demand and low productivity, underpinned by the five binding constraints on our economy, namely electricity supply, finance, fragile balance of payments, politics and poverty needs to be addressed.”

This, he said, accords Zimbabwe two options, the first being “the retention of the status quo, characterised by uncertainty and the total subordination of the economic agenda to predatory politics”.

This credible scenario, he said, “will entail a continued reproduction of the enclave economy and further impoverishment of our people”.

Biti submitted to parliament that reversing these circumstances “requires a major paradigm shift by all of us, and the pursuit of a united common vision under a stable democratic political dispensation with strong leadership”, including “graduation from the current status quo of vicious cycles of exclusion into virtuous circles of inclusion among movers and shakers”, which, he said, must include:
Facilitating innovation, entrepreneurship, rising living standards and demands;
Facilitating growth in agriculture, manufacturing, services, SMEs, mining; and
Creating jobs in villages, towns and cities for adults, youth, men, women, and raising tax.
This, he said, could be achieved through “the pursuit of rigorous programmes of public reforms that include payroll management, strengthening public finance management systems, dealing with the infrastructure and technological deficit, restoring the land market and securing property rights and reducing financial sector vulnerabilities”.

He was similarly emphatic on the need to create an investment-conducive environment, including ensuring that indigenisation and economic empowerment policies and practices must not deter necessary investment.

Undoubtedly, many of Biti’s views were not well-received by some parliamentarians as often “the truth will hurt”. But his courageous enunciation of facts and realities can, in time, be a first tentative step towards a meaningful, economic upturn (although, inevitably, there were also various negative and counter-productive measures within the 2013 budget).

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