IN his monetary policy statement this week, Reserve Bank of Zimbabwe governor John Mangudya struck the right chord when he clearly articulated a raft of reform measures needed as part of efforts to revive the dying economy.
Zimbabwe Independent Comment
Mangudya said the central bank — which also provides policy advice to government besides its monetary policy core mandate — is convinced addressing structural reforms, that include the ease and cost of doing business, fiscal consolidation, public finance management and re-organisation of state-owned enterprises, is key to economic recovery.
“This, together with the completion of the re-engagement and arrears clearance programme on the basis of the undertakings made in Lima, Peru, in October 2015, will go a long way to improve Zimbabwe’s investment climate and its access to foreign finance,” Mangudya said. “Improved investment climate and access to foreign capital are essential elements to buttress the multi-currency exchange system, which has served the country very well since its adoption in 2009. It is therefore critical to note that currencies throughout the world are strengthened by productivity which is a function of investment and business sentiment. It is precisely for this reason that the bank’s assertion is that the challenges facing the country are a production phenomenon as opposed to a currency circumstance. The bank believes in the provision of incentives, in their broader context, to expand output and productivity.”
Mangudya said a mutually reinforcing three-pronged policy approach relying on monetary, fiscal and structural policies would be helpful in arresting the current economic tailspin and associated consequences.
“These structural reforms are quite fundamental as they are the bedrock of achieving the supply-side development goal that is anchored on the need to balance exports and imports whilst simultaneously boosting domestic demand or output,” he added. “Addressing the structural reforms would therefore enhance business confidence and attract investment.”
This, coupled with Finance minister Patrick Chinamasa’s stymied reform proposals, is sound and progressive advice.
However, the major problem is not just President Robert Mugabe’s failed authoritarian rule, ineptitude and corruption alone but also lack of political will and progressive politics. Government simply lacks the political will and commitment to reforms, especially those which may not be immediately successful or popular. Hence populist policies which may win votes, but destroy the economy. Reckless demagoguery, fake promises and lies are their stock-in-trade, not essential and sustainable reforms. There is a dire need for progressive politics in Zimbabwe to replace the current toxic political culture. Progressive politics enable reform and change. Government should be responsive to citizens’ needs to improve governance and conditions in society.
Reforms come in many forms, from the so-called big bang to the incremental ones. Zimbabwe needs the big bang approach, but for now a gradual strategy will help. Serious political leadership is critical. We need leaders who understand the case for reform and are prepared to actively push it, not these corrupt and incompetent hardliners.