Creating a developmental state in Zim

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A Zimbabwean man shows off new bond notes outside a bank in Harare on November 28, 2016. Picture: Philimon Bulawayo/Reuters

Vince Musewa
economist

THE transformation of any society requires three things: First the profound realisation that it must change, second is finding those practices that will cause the change and third is adopting those practices.

I think this is now the case in Zimbabwe.

In order to achieve our economic objectives as a country, especially with regard to incomes and quality of life, we must create a transformational developmental state in Zimbabwe.

The “developmental state” is a term coined by Chalmers Johnson that is used to describe states which follow a particular model of economic planning and management. It was initially used to describe post-1945 Japan and its rapid modernisation and growth.

A simple definition would be: “A developmental state is a state where the government is intimately involved in the macro and micro-economic planning in order to grow the economy”, with the addition “whilst attempting to deploy its resources in developing better lives for the people”.

What are the characteristics of a developmental state?

The United Nations lists the characteristics of developmental states as the following:

A government with the political will and legitimate mandate to perform the required functions;

A competent and neutral bureaucracy that ensures implementation. This requires a strong education system and efficient set of public sector organisations with little corruption;

An institutionalised process where the bureaucracy and government engages with other stakeholders; and

An established development framework and a comprehensive governance system to ensure the programme is implemented, for example a central function responsible for overall co-ordination.

China, Singapore, India, Thailand, Taiwan, Vietnam, Malaysia, South Korea, Philippines, and Indonesia are all categorised as developmental states

Accordingly, it is agreed that the developmental state not only refers to the collective economic and human development, but also describes the state’s essential role in harnessing national resources and directing incentives through a distinctive policy making process. It is vital to look at the state’s role as a partner with the private sector in national industrial transformation. The state is a catalytic agency and managers respond to the incentives and disincentives the state establishes.

The government has taken a central role in macro-economic planning. The question will always be the political will and capacity to effectively implement and monitor resource allocation and management which was the main problem under Mugabe regime.

We have seen President Emmerson Mnangagwa appointing an advisory council and also establishing taskforces to ensure effective implementation of developmental projects. This is an important step but we all know that our country has no problem coming up with new ideas but without effective implementation.

The key deliverables must include those issues raised by the then minister of finance, Patrick Chinamasa, under the Lima strategy document of September 2015 when the minister issued a document titled “Zimbabwe’s strategies for clearing external debt arrears and the supportive economic reform agenda.”

The supportive economic reform agenda stated in that document includes: The strengthening of confidence in the financial services sector, accelerating re-engagement with the international community, revitalising agriculture, advancing beneficiation in or value addition agriculture and mining, focussing on infrastructure development, unlocking small to medium enterprise potential, improving the investment climate, accelerating public enterprise reform, modernising labour laws and aligning of laws with the constitution and dealing seriously with corruption.

All these issues were further articulated in the Transitional Stabilisation Programme (TSP) by the new minister of Finance, Dr Mthuli Ncube. Of course what matters is the actual implementation and urgency of economic revival. An inclusive developmental state is the correct way to go but it requires a leadership with a deep understanding of the complexities and challenges of socio-economic transformation.

According to the minister, the TSP will focus on stabilising the macro-economy and the financial sector, introducing necessary policy and institutional reforms, to transform to a private sector led economy, addressing infrastructure gaps and launching quick-wins to stimulate growth.

The key issue that we need to focus on now is that of dealing with macro-economic imbalances. Without macroeconomic stability including price stability and currency reforms, we will be unable to see any economic progress.

Macro-economic stability is the absence of currency fluctuations, high debt burden and unmanaged inflation which can result in economic crisis and collapse in GDP. It also includes minimising our economic vulnerability from both internal and external shocks and the pursuit of consistent well-thought-out economic policies which create predictability and allow effective economic planning and growth.

Fiscal and monetary discipline, as well as a sustainable balance of payments position are therefore key. The restoration of fiscal balance through fiscal discipline to reduce the government budget deficit is the biggest challenge to be faced by the new Finance minister.

The government must reduce expenditure through better resource management, manage and reduce debt as a matter of urgency and redirect expenditure towards capital formation, broaden tax and plug revenue leakages base to increase revenues to Treasury thus reduce the pressure to continually borrow.

On the issue of institutional reforms, it is clear that without the appropriate institutional arrangements any developmental initiatives are bound to fail.

Zimbabwe’s institutional capacity to deliver has been hugely compromised and we must begin to see better national budget expenditure control, a reformed public service, dealing seriously with corrupt behaviours, attending to the ease and cost of doing business and integrating our economy into global markets especially on trade and finance. Added to this is the creation of a stable and peaceful socio-political environment.

Investors are certainly not attracted to a country where there is continuous political bickering and uncertainty. A stable socio-political environment contributes to growing confidence. It is important to resolve the political question. We have recently seen moves to begin to create the necessary environment for meaningful dialogue. What is key is that Zimbabweans from all sectors of society, including those in the Diaspora, must realise that it is only us who can and must solve our problems. We are responsible for the narrative on Zimbabwe out there. Dealing with the political questions is therefore not a luxury but a key determinant on whether we can create a stable environment for economic stability and growth.

I would therefore say that in order for this developmental state to emerge there is still a lot of work which needs to be done and it will take some time before we can begin seeing new results. Zimbabwe’s economy is broken and so is our society after many years of oppression and lack of economic discipline and responsibility from government.

In my opinion, with a unity of purpose, especially on the political front, as well as peace, stability, accountability and focus on the necessary economic reforms we can indeed become characterised as a developmental state.

Musewe is an economist. You may contact him on vtmusewe@gmail.com. These New Perspectives weekly column are coordinated by Lovemore Kadenge, president of the Zimbabwe Economics Society (ZES) Email kadenge.zes@gmail.com and cell number +263 772 382 852.

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