First small economic step forward

Last week’s referendum on the proposed new constitution was a small but positive step towards a Zimbabwean economic recovery of substance, albeit that many further steps are needed, most of which will have to be of an even greater, economically-conducive nature.

Opinion by Eric Bloch

An essential for Zimbabwe to achieve the long-desired comprehensive economic recovery is extensive investment from both domestic and foreign investors.

Investment security is also a prerequisite for almost all potential investors.

The absence of confidence in such security being assured is the most pronounced reason for most who would otherwise invest to refrain from doing so.

In like manner, lines of credit and loans are not forthcoming, be it to government, banks and other financial institutions, commerce and industry and key  economic sectors, unless the would-be lenders have great confidence that their funding, and the repayment thereof, is secure and assured.

One of the key elements that make investors and lenders feel their funds are secured is that the country into which the the money is being injected is governed in accord with fundamental principles of democracy, it has complete adherence to preservation and implementation of law and order, and unequivocal respect and observance for human and property rights.

Most of these essential elements have been absent in Zimbabwe for many years and hence there is an ever-greater reticence on the part of would-be investors and financiers to engage in any transactions in Zimbabwe.

This has impacted adversely on all sectors of the economy, and indirectly on government and its much-needed fiscal resources.

In particular, it has constrained the operations and development of the manufacturing, commercial, tourism and agricultural sectors and even to some extent the exploitation of Zimbabwe’s vast mineral resources.  But the first evidence of a positive change was last week’s constitutional referendum.

For in contrast to elections over the preceding three decades, it was conducted with a high level of transparency, efficiency, and was almost devoid of intimidation, harassment of voters, and concomitant violence.

While after many years of extremely non-transparent, undemocratic elections, the referendum was conducted in a much better manner, a high level of voter apathy was inevitable, resulting in less than half of those who could vote doing so.

Nevertheless, the three million who cast their votes were able to so in the manner they wished, without any severe external pressures upon them.

Moreover, although the new constitution is not perfect, and incorporates diverse concessions by the various political parties that were engaged in pursuing its formulation, it has some significant improvements over the constitution that was, to all intents and purposes, imposed on the populace in 2000.

Among the more significant, and potentially economically beneficial changes incorporated in the new constitution is that rural lands will be negotiable and transferable by way of cession of leases (for title deeds are not being reinstated, but the negotiability and transferability does accord a significant element of title), and this will accord the under-capitalised farmers access to borrowings to fund their operations, once financial institutions enjoy a restoration of liquidity.

This will be a key element of Zimbabwe regaining its former repute as the “bread basket of the region”, instead of being highly dependent on costly imports to meet the basic food needs of the population.

The partial provision within the new constitution of gender equality is also a material factor in pursuing economic development and growth, as also are some of the modifications to the qualifications to attain or retain Zimbabwean citizenship, notwithstanding that many who had dual citizenship prior to 1984 are still unable to regain such status.

A further factor which has enabled the world at large to perceive that Zimbabwe is beginning to pursue democracy was that the referendum was so structured as to enable almost all who wished to vote (and were qualified to do so) to be able to do so without undue burden of vast distance travel.

This is because 9 000 polling stations were operational throughout the country.

Regrettably, however, postal voting was not reinstated, which would have further enabled voter participation.

The fact that the referendum was conducted in a substantially proper manner, and that the results were forthcoming fairly rapidly, were reinforced by the observations and the subsequent statements of almost all the independent observers, although they were mainly from the Sadc region, and from other “friendly” states in Africa.

However, they also included up to five persons from most of the embassies and diplomatic missions operating in Zimbabwe.

Nevertheless, such positive findings would undoubtedly have been even greater and internationally more meaningful if Zimbabwe had not precluded the presence of observers from Western countries, and if it had permitted more extensive NGO participation than it agreed to.

Building upon the foundation created by the referendum for investor confidence to be regained, it is now of critical importance that, without undue delay, the legislative requirements for it to be binding are completed, and that Zimbabwe proceed to presidential and parliamentary elections within a short period of time (hopefully by June or July, 2013).

Such elections should be conducted with as great, or preferably even greater transparency, freely and fairly, fully observed by the international community. If that is so, it will be major step forward to Zimbabwe regaining a viable, strong, economy supportive of the majority of the populace.

Even prior to such elections, there is much else that Zimbabwe can and should do to restore investor confidence and a substantial inflow of funding, with the concomitant creation of employment, enhancement of exports, diminution of import dependency, growth in tourism, and many other economic developmental needs.  Amongst the factors needing the greatest, and most urgent, attention are:

A constructive modification of the Indigenisation and Economic Empowerment legislation, assuring progressive real empowerment for many, instead of only the selected few, while not alienating the investment needed for economic growth, and not breaching the fundamental principles of property rights;

Marked diminution in the very pronounced corruption prevailing in both the public and private sectors;

Partial or total privatisation of key parastatals and other state enterprises;

Constructive modification of taxation legislation, and the application thereof, including real incentives for investment, employment creation, transition from informal to formal economic sectors, and growth in exports;

Enhanced fiscal probity, including belated compliance with Bilateral Investment and Promotion Agreements, reduction in non-essential government expenditures, reduction in the bloated public service, and assured policy consistency.

It is a very aged saying,  and trite to say: “Every journey begins with a single step”.  With its constitutional referendum, Zimbabwe has taken that single step, but it must continue on that journey with utmost vigour, unhesitatingly taking many other necessary steps.  If it does so, it will not only regain, but will enhance its former economic glory.