HomeBusiness DigestUnpacking key elements of Star plan

Unpacking key elements of Star plan

The Star is a proposed economic development plan for Zimbabwe. The overarching objective of Star is to build a US$100 billion economy in order to realise stability, security and prosperity for the people of Zimbabwe. This growth trajectory should see Zimbabwe leapfrogging from stagnation and deflation to speedy recovery.

Tapiwa Mashakada

This economic plan is predicated on the key assumption that in order to achieve double digit growth rates, the economy should undergo economic transformation that will catapult mining, tourism and the services industry. This transformation should be achieved through a sustainable economic development strategy. It is hoped that Star will generate a positive dialogue that will spur policy convergence in Zimbabwe. I therefore hereby lay down the key elements of Star and unveil it in the public domain for debate.

Zimbabwe’s recovery has been very elusive despite all spirited attempts to jump start it using a cocktail of short term fiscal and monetary policy measures. Achieving sustainable and inclusive growth has proved to be the most difficult target for policy makers in Zimbabwe.

GDP growth has plummeted to an average of 2,5 % since 2013 compared to an average growth rate of 7% between 2009 and 2013. It is not so obvious or easy to deal with the causes of Zimbabwe’s serial economic fragility because most of our problems are structural and of a political economy nature. This is why simple neo-liberal IMF and World Bank programmes such as the so-called Staff Monitored Programme will not work. In this policy paper, I attempt to propose an agenda that can move Zimbabwe forward. I am therefore putting forward an agenda for a new economic dispensation post the 2018 elections. My assumption is that between now and 2018 government will neither have the sufficient fiscal space nor the capacity to stimulate the economy because in the absence of FDI and international support, it cannot deal with the vexing problems of a comatose productive sector coupled with lack of capital and a weak domestic revenue base. Neither will it have the political will or courage to introduce structural reforms.
What needs to be done?

  •  The first order of business is a stable government ushered in by free, fair and credible elections in 2018. The new government must be willing and politically capable to usher in political and economic reforms by transforming the model of the state from a predatory state to a developmental state. The issue of a credible government is necessary to open doors to the international community, the removal of self-inflicted sanctions and the restoration of diplomatic and economic ties with the rest of the world.
    Linked to this, is the need from the onset to rightsize government and cut expenditure by reducing the Cabinet to 20 ministerial portfolios, reducing embassies by 50%, limiting foreign travel by state officials, abolishing the Senate and reducing the number of seats in the Lower House, procuring vehicles from local manufacturers/assemblers under the buy Zimbabwe campaign and doing away with governors or resident ministers.

Secondly, I propose a Zimbabwe Investment and Debt Conference. Immediately after elections, the conference should be convened to adopt a new economic blueprint and vote of credit based on pledges by the international community. The target of the conference should be to raise US$10 billion for the Zimbabwe Growth Fund. This money should take the form of lines of credit, official development assistance, concessionary loans and grants, FDI and private sector finance. The same conference should discuss Zimbabwe’s sovereign debt and how to restructure it in order to reduce the debt service burden. Zimbabwe and its creditors will have to reconcile debt figures. Zimbabwe may repudiate odious debts through a thorough and judicious engagement with its creditors.

  • Fiscal and macro-economic stability is critical for economic recovery. Currently Zimbabwe suffers from the uneasy triangle of absence of official development assistance, low revenue base and absence of balance of payments support. This has affected growth and caused deflation. Deflation is exactly the opposite of hyperinflation and the consequences on stability are the same. In medical parlance, its like blood pressure, — High blood pressure kills the patient and low blood pressure kills the patient. The use of the United States Dollar should continue in order to maintain currency and price stability.
    However, a Currency Board should be set up to enquire into the advantages and disadvantages of dollarisation on economic growth and recommend circumstances under which de-dollarisation is possible. This plan requires a macro-economic framework that is characterised by a double digit average growth rate per annum, among other indicators. The overall objective should be to achieve a macroeconomic and budgetary framework that is based on robust growth, stable inflation and a sustainable budget and trade deficit.

Economic recovery should critically depend on the recovery of agriculture; industry; mining: tourism and infrastructure (the productive sectors). Part of the US$10 billion should go towards the revival of the productive sectors. For agriculture, the focus should be on food security and restoration of Zimbabwe’s bread basket status. For industry, the focus should be on investment, agro-processing and retooling. For mining, the focus should be on new investment and local beneficiation. For tourism, the focus should be on visa regime reforms and security of the person. For infrastructure, the focus should be on the rehabilitation and construction of new projects. There has to be a separate capital budget to drive the Public Sector Investment Programme.

  • Investment should grow and eventually replace aid. The Zimbabwean Diaspora is critical in the mobilisation of capital for the development of the country. All Zimbabwean citizens in the diaspora should get dual citizenship. The ease of doing business should be addressed for both domestic and foreign investors through an electronic one-stop-shop investment agency, based on the brand “Invest Zimbabwe.” All laws inhibiting investment should be rationalised through amendments or repeal. The objective is to increase the ratio of foreign direct investment to GDP from its current levels of 4% to 45 % of GDP.

Through purposive decentralised budgetary interventions, rural district councils should be empowered to carry out infrastructural projects and the development of rural industries based on the micro enterprise model. Rural housing, road construction, water and sanitation and renewable energy should be rolled out in rural areas.

  •  A micro-enterprise bank should be established to provide cheap loans for startups and incubation centers. All SMEs should pay tax. Modalities of that will be worked out and refined.

Fiscal and institutional reforms will be undertaken targeting parastatals: Local authorities; the Public Service Commission, the Public Procurement Board and other key institutions. The objective is to enhance efficiency in service delivery and stamp out rampant corruption.

  • Zimbabwe belongs to its citizens who should be given the right and opportunity to participate in the political and economic governance of the country. An opportunity to participate in shaping the development agenda of the country is a right for all Zimbabweans.

The economy must create jobs for school and college leavers in all sectors of the economy. This can only happen if the private sector is recognised as the engine for growth. Parastarals and the civil service have been the traditional sectors employing the majority of workers in Zimbabwe. Now, new emphasis would have to be put on job creation in new areas such as infrastructure, especially housing and public works services sector.
Entreupreneurship should be heavily supported so that SMEs and family businesses are created. Poverty alleviation schemes should be put in place so that no Zimbabwean should live on less than a dollar a day. People’s livelihoods would have to be addressed in urban and rural areas. Citizens who are over 70 years old should not pay health fees, electricity, water and transport bills. Taxation on pension benefits should be scrapped.

  •  There ought to be a new paradigm shift on education and health. Primary education and tertiary education tuition fees should be funded by public-private partnerships. Emphasis on free higher education is based on the premise that the Zimbabwe Manpower Development Fund is no longer being used for its original purpose. It is being abused as a slash fund by the State. Parents should only pay for pre-school and secondary education. Public health should be free to all senior citizens. Given the prevalence of cancer, its treatment should be free. Investment incentives should be provided to investors in the health care sector in order to boost infrastructure and the supply of equipment and drugs. Research and innovation in health should be funded through public-private partnerships.

There must be a revolution in the manner in which civil servants are treated. All civil servants should own houses and be facilitated to buy locally assembled cars for themselves through a government Own Your Car and House Scheme. Civil servants should earn competitive salaries which will motivate them to work and pay income tax. This will restore their lost dignity. However, a fresh independent audit should be conducted to establish the correct position regarding the actual size of the civil service.

  • Social protection is an integral part of any progressive government policy. All genuine war veterans should have access to free health. All pension benefits in Zimbabwe should not be taxed.War veterans do not just belong to Zanu PF. They are a national institution. These measures may be a case of too little too late as most our war veterans are in advanced age and living in abject poverty. However, the fact of the matter remains — that war veterans should be honoured by providing for their socio-economic needs. Other vulnerable groups are those who are physically and mentally challenged, the aged, orphaned children, pregnant women and those living with chronic diseases or life-threatening diseases who need special supportive measures to cope with their conditions.

    The other area which needs policy intervention is the issue of refugees and immigrants.

    Active labour market policy measures have to be put in motion to deal with structural and long-term unemployment. This requires training and retraining of school leavers and graduates to realign skills with the changing job patterns especially in the fast growing knowledge sectors. Nssa should be restructured to reposition it at the centre of social protection. A National Health Insurance scheme should be introduced to cover vulnerable groups’ medical requirements. This should fall under Nssa. Social contract (and not flexible labour markets,) is the foundation of labour market stability. Social dialogue is the answer to the problems of productivity, profitability, employability and compensation. Nssa resources should go towards funding pensions and other benefits not investment in shares or other speculative assets. However, Nssa can invest in housing development and infrastructural projects with a high social and economic return.

There ought to be change with stability in Zimbabwe. In order to achieve that, the army, prisons, security and police command should be given a five-year window to balance renewal with continuity in order to effectively maintain and safeguard our sovereignty and territorial integrity. A clear succession trajectory should be initiated in regard to the command of our security services taking into account the values of the liberation struggle and the need to infuse new blood and skills at command and boots levels. But most importantly the funding, retraining and re-equipping of our security forces should be given more priority.

Most of the equipment is outdated and the Central Intelligence Organisation, army and police need modern state-of-the-art equipment. Our prisons are congested. There is need to build more prisons inorder to decongest the correctional institutions built for a small population in the colonial days. A human rights curriculum should be part of the training modules for our security forces. In addition, our security forces need motivation. They have to be well remunerated and given decent accommodation and adequate supplies.

  • All land and natural resources shall belong to the state. Land is a God-given resource. Those allocated pieces of agricultural land are holding the land in trust on behalf of the state. Only urban residential, commercial and industrial land can be deemed freehold land subject to public interest. All natural resources including sub-soil resources should belong to the state. Investors should buy rights to carry out their business on land, mineral and other natural resources. An independent and well-funded Land Commission should be put in place to ensure that land is not underutilised. All large commercial A2 farms should be subdivided into prescribed farm sizes to allow more landless people to access land. A1 farms should be relooked on the basis of orderly productive resettlement with proper social and economic infrastructure such as roads, cattle dips tanks, water, electricity, schools and clinics.
    Conservation should be strictly enforced.

    The current hap-hazard self-resettlement pattern in some parts of our rural, urban and transport corridors should not be allowed to subsist. The state should manage the carbon footprint through the development and implementation of a robust climate resilient policy on mitigation, adaptation and finance. Sustainable development should be the main thrust of economic policy.

  • The constitution should be implemented in full and Zimbabwe should be truly a constitutional democracy. Nobody should be above or below the law. All natural and juristic persons shall be protected by the law and enjoy the Bill of Rights. In this connection, all transgressions on Bilateral Investment Promotion and Protection Agreements should be corrected. Compensation for evicted farmers should be addressed gradually, hopefully with the support of the United Nations, the African Development Bank and the World Bank.

  •  In a democratic Zimbabwe, journalists should enjoy freedom of expression subject to the laws of the country and the constitution.
  •  Zimbabwe’s rural, farm and urban infrastructure is now battered and in bad shape. Subject to approval by parliament, a new tax called the Infrastructure Tax should be introduced to mobilise resources for infrastructural development. The money should go into an Infrastructural Development Fund with the necessary legal framework put in place. The Aids Levy has served its purpose. It should be scrapped. The fund should focus on key priority areas such as housing, roads, water, sewer reticulation, electricity, icts, rail network etc.

  •  On devolution and decentralisation, Zimbabwe should remain a unitary indivisible sovereign state. An Act of Parliament should be enacted in order to guide the process of devolution. The state must ensure that national resources are shared equally by all its citizens irrespective of region or ethnic group. The state must achieve regional balance on development, devolution and decentralisation of investment projects and national institutions.
  •  Transitional justice — the country needs National Healing, Peace and Reconciliation based on truth and justice. A closure has to be put to our political history so that the country moves forward in unity. The Human Rights Commission and the National Peace and Reconciliation Commission should be given statute laws to execute their clear mandates. They should be given the latitude to operate without fear or favour.

    Tapiwa Mashakada is Executive Director: Pan-African Institute for Sustainable Development and former Economic Planning minister. He writes in his personal capacity. For feedback please contact email: glenvillebryden@gmail.com, mobile +263 772 601 424.

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