The rapid industrialisation of provincial economies

THE rapid modernisation and industrialisation of provincial economies is key to achieving Vision 2030, in creating inclusive growth, creating local employment opportunities, eradicating poverty and ensuring that provincial economies are the ultimate beneficiaries of their factor endowments.

The Transitional Stabilisation Programme (TSP) talks about the empowerment of provinces and envisages empowered provinces and states the following:

While Zimbabwe remains a unitary state, the implementation of the country’s development programmes will allow for devolution to achieve fair and balanced development, spearheaded by provincial councils which will initiate development programmes for their respective provinces, consistent with section 264 of the constitution;

The TSP outlines targeted programmes to champion economic development across the provinces;

This represents a new governance dispensation where decentralisation becomes a key feature and strategy for fair and just governance across its four dimensions, namely administrative, political, fiscal and market; and

To this end, the Civil Service Commission will facilitate the transfer of the requisite functions and establish the structures and systems that will enable all provinces to plan and implement their economic growth and development using their factor endowments.

It is therefore critical that our provinces are geared to taking full responsibility of their own developmental objectives, given their unique factor endowments, needs, population profiles and geography.

The key success factors must include:

First and foremost, provinces need to know the extent of their key assets which they have, be it land, minerals culture or human capital per district. This requires thorough research and documentation of what each of our provinces are endowed with at district level.

A partnership with local academic institutions as encouraged by the president will play an important role. The collection and dissemination of key statistical information, for example, will have to be done by each province so that we are able to measure progress.

Agriculture and mining resources in each province must be fully exploited to the benefit of locals. The allocation of land assets, for example, must also prioritise local ownership. So should the issue of mineral claims and rights. We must stop extraction of wealth from our provinces without locals benefiting. Tourism is also a quick-win sector in most of our provinces and so the upgrade and marketing of tourism assets, including cultural tourism must not be outsourced to Harare.

Second, provinces need to create an awareness of the investment opportunities per sector which are within. In Manicaland, for example, we published an Invest In Manicaland magazine which will be done annually — showcasing to potential investors, both local and international, the investment opportunities which exist in that province.

Added to this, provinces must have their own “one-stop investment centres” where potential investors can engage. This will require building or recruiting a local skills base and having the administrative capacities to deal with investors at provincial level. Investors must be continually encouraged to partner with locals.

Key will be the ability of province to effectively market and promote themselves to their target markets. A marketing and promotion strategy will have to be in place for each province and be driven to promote local economic development and investment.

Third, compiled developmental plan which looks at the key sectors and how each sector is provinces need a comprehensive developmental plan. Each province must therefore have a deliberately going to be developed over the next five, 10 or 20 years.

Core to this plan must be industrialisation through value addition and beneficiation. When we industrialise we use our primary products to produce or manufacture processed or finished goods and we create high-income sustainable jobs and thus reduce poverty.

Fourth, each province must have job-creation strategies. Creating local jobs boosts local economic activity and local disposable incomes and further creates other downstream opportunities thus creating inclusive growth.

Many a time our provinces award local contracts or source goods from elsewhere thus limiting local economic growth opportunities. This also includes big business who continue to starve local provincial economies of opportunities. Local empowerment in all sectors must be a deliberate provincial policy and must be monitored and measured regularly.

Fifth, each province must have a clear poverty alleviation strategy which is unique and tailor-made to its needs. We have, in the past, left issue of poverty and food security to development partners and non-governmental organisations or to national government. The extent of poverty and lack must be a well-known and monitored statistic at district level in order to measure progress. Engagement with NGOs is critical and a joint poverty alleviation strategy will be key.

Next, it is critical that each province achieves youth and women empowerment. We need organised youth and women’s groups in every province and they must take responsibility for their own economic emancipation and not wait for Harare to determine progress.

Access to information and capital will be key. The National Youth Policy must be implemented at provincial level.

Access to world-class education health and decent housing also needs to be localised. We must see major hospitals being established in every province while education institutions must also be available at local level.

To date, we have done well with universities, but we need more learning institutions and research institutions in each province. Developmental research, innovation hubs, incubators, technical colleges are critical ingredients for future growth. Educational institutions must also be involved in developmental and industrialisation initiatives at provincial level.

We must see social services delivery by councils being a priority. A close collaboration between ministers and provincial councils and municipal councils is critical for accelerated development. Regular feedback mechanisms need to be put into place including the monitoring and evaluation of social services delivery and effective and accountable use of financial resources.

We then have the issue of ease of doing business at provincial level. All public institutions must change their culture and behaviour to improve on turn around. The processing of documentation and approval of projects and licences must be benchmarked and continuously improved upon.

For example, the issue of passports, identification documents, birth and death certificates, tax certificates, including all key documentation must be done at provincial level. This will require use of information communication technologies by well trained and competent civil servants. Training and capacity building will therefore be key.

Having said the above, nothing will come of all this unless each province is able to attract its own developmental and investment capital. Provincial developmental and industrialisation venture funds are going to be critical. This will require provinces to go out there and attract own investors. The will require provinces to package themselves as viable investment destinations to attract private capital. This will also require local funds management, deal structuring and investment capacities.

Of course, the business sector within each province, which includes large and small business, will have a central role to play to achieve provincial developmental objectives. The various business associations and chambers at provincial level must therefore be self-organised and autonomous to be able to exploit new opportunities without the need to continually refer elsewhere.

A partnership between provincial government and the private sector at provincial level is important so that all stakeholders work towards collective goals of local social and economic development.

Leadership by Ministers of State at provincial level remains a factor which will determine whether each province is going to meet its developmental objectives and contribute towards national GDP and Vision 2030. This requires proactive and informed ministers who are aware of economic imperatives and have capacity to intervene and expedite. Ministers will therefore need support structures and actors within the province to implement projects. Project management, implementation and monitoring skills are required.

In addition to the above, ministers must have leadership skills to unite everyone towards provincial goals and promote unity and peace. Ministers must promote national objectives and be informed of economic and social development in the province. Ministers must communicate regularly with all citizens and have the competence within their offices to use social media as a communication tool.

The make-up of provincial councils and their experience, attitude and paradigm will also play an important role. The President has made is very clear that the Second Republic is more about economic development and not politics. It will therefore be most important to see which provinces rise to the occasion.

Focussing on delivery will be key in order to promote Vision 2030. Above all, the management and allocation of scarce resources by and accountability of provincial councils will determine their ultimate success.

Vince Musewe is an economist and developmental policy advisor. These weekly New Perspectives articles are co-ordinated by Lovemore Kadenge, president of the Zimbabwe Economics Society. — and cell +263 772 382 852.

A dichotomy in the thrust of discussions on how the recent pensioner prejudice came about immediately showed up on going through the interview Economic turmoil robs pensioners once again and RTGS$ introduction inflicts further pension prejudice.

These were pieces ran in the Zimbabwe Independent of April 5 to 11, 2019. One, and only one, of these pieces must be a correct narrative of the causes of pensioner prejudice in Zimbabwe. This, of course, calls for a dialectic interrogation on the exact causes of pensioner prejudice, thereby enabling a check on the accuracy of each of the two pieces.

As its apparent theme, the first piece Economic turmoil robs pensioners once again portrays a pension industry with some capacity to pay pensioners something significant, in excess of RTGS$30 million, so far unclaimed by 50 000 pension beneficiaries.

The piece says that the beneficiaries have not claimed largely due to lack of information about the existence of the funds.

The interviewee in the piece, Reginald Chihota, of the Zimbabwe Association of Pension Funds (ZAPF) then delves into the “challenges” faced by the pensions industry as a consequence of legacy issues not least aligning “. . . the expectations of our membership to, among other things the amendments of the proposed new Act.”

According to Chihota, and obviously his ZAPF, they intend to get over these “challenges” by lobbying the regulator, Insurance and Pension Commission (Ipec) to implement “. . . various initiatives . . .”, including introduction of inflation linked bonds, access to off shore investments, this as apparently proposed in a Pensions and Provident Fund drafts Bill.

Now the theme of this interview, as highlighted in bold, about unclaimed benefits can clearly be recognised as one of Ipec’s unsubstantiated public charades, being reiterated throughout the interview, although somewhat unconnected to the main body of the article. But to be sure, $30 million, whether United States Dollars or RTGS$, distributed over 50 000 pensioners entitles the pensioners in question an average of $600 each.

This Ipec charade is not specific on what this average benefit amount represents, there being several pension benefit types as provided for in rules of pension funds — full commutations, spouses’ benefits, among other benefit types are examples.

Whatever benefit types they are, the $600 is quite simply paltry considering the typical pension benefit as provided for by the rules of a typical pension fund for a pensioner who typically would have participated for an average of 20 years.

Ipec cannot really go to town about this, there being much more at stake for pensioners than this $600. What is even more baffling is why Ipec is not proceeding to identify the beneficiaries and pay out, as pension funds are required by law to maintain data about members of pension funds, allowing the member to be traced, just like data for a bank account holder. Could this be one of Ipec’s incompetency which is a cause of pensioner prejudice?

To get back to the main body of the interview, firstly Chihota admits that the “challenges” are not new as they are a consequence of “legacy issues” to do with aligning pensioners’ expectations to a proposed new Act, among other things.

He is not specific about the amendments in the Act, and about the proposed new reforms, only being specific about the envisaged introduction of inflation-linked bonds and of offshore investments for pension funds. Their strategy, as ZAPF, is to lobby Ipec to get amendments in the Act enacted, such as to have inflation-linked bonds and offshore investments operational.

There is really nothing in this interview which categorically points to “economic turmoil” as a cause of pensioner prejudice, except a veiled attempt to apportion blame to the so-called “legacy issues”. To the discerning reader, the interviewee was vague, with an apparent motive to exonerate his organisation, ZAPF from the prejudice being suffered by pensioners.

It is, therefore, more interesting why ZAPF would tow this rather clandestine line. ZAPF is essentially an organisation that represents the business interests of insurance companies, related service providers and of employers, although its original purpose back in the colonial times, was to represent pensioner interests.

It has since been completely subverted by the insurance companies and employers. It is not a secret that ZAPF enjoys a close, cosy rather secretive relationship with Ipec — Ipec invariably blesses all ZAPF annual conferences with its presence.

It has, for instance, been widely reported that insurance companies misappropriate pension funds through various strategies, not least overcharging the pension funds for services that they purport to offer to the pension funds — Ipec turns a blind eye.

It would not, therefore, be unexpected that ZAPF has its sleight hand in crafting of Bills for Ipec to suit its (ZAPF) interests.

Indeed, twice, Ipec has surreptitiously attempted to introduce Bills entrenching the wrong benefit formulae used by insurance companies to prejudice pensioners — media analytical pieces entitled Provisions for Pension, Provident Fund Bill and Changes in insurance regulations give false sense of protection bear witness to this apparent institutional mischief.

It is not improbable that Ipec, ZAPF and other such associations fraternised by insurance companies consult behind doors, evidently excluding the real owners of the pension and insurance funds — the pensioners. The authorities such as Parliamentary Portfolio Committees, the National Assembly and Cabinet have tended to blindly trust Ipec and associations such ZAPF, and brush aside the interests of the real owners of pension funds.

The lack of specificity about amendments in the Act are deliberate, and meant to ambush the pensioners and the public in general with prejudicial amendments.

Further, there is absolutely no need to align the interests of pensioners to these amendments as pensioners know exactly what they should be entitled from the rules of their respective pension funds.

ZAPF knows that lobbying Ipec to implement all its prejudicial strategies is a done deal, as Ipec is a weak institution that plays to its tune. The talk about proposing inflation linked bonds is another of those institutional charades dating back to the 1990s.

There has not been any serious evident moves to introduce such bonds, such as setting up an alternative objective inflation index, constructively engaging government about the index and the attendant introduction of the bonds.

Finally, the talk about exposure to offshore investments for pension funds is wholly oblivious to the fact that domestic investment and capital thereof, cannot be invested willy-nilly into other economies to develop those economies rather than that of the domestic investor in question.

Apart from taking a swipe at government that it is kleptocratic, and cannot be trusted with such domestic investment, it is clear evidence that ZAPF would rather not engage government firmly and constructively about how pension funds must be invested locally for the benefit of pensioners and the economy — but it is their role, as is the role of such associations in other progressive economies. The reason for not so engaging government is just down to incompetency and for their own selfish interests.

Turning to the second piece, RTGS$ introduction inflicts further pensioner prejudice, this article categorically demonstrates how introduction of the RTGS$ inflicted additional prejudice over and above prejudice that led to the recommendation for pensioner compensation by the Justice Commission Report.

In the final analysis, the piece appeals to the Parliamentary Portfolio Committee on Finance prevent such robbery of pensioners.

Reliable information shows that the Portfolio Committee has gathered evidence from all stakeholders to pension and insurance industries and put together a report for debate in the National Assembly.

It is probably instructive to note reasons for pensioner prejudice, in the comfort that they are amenable to testing for their veracity.

Therefore, the second piece should pass as enshrining the true real causes for pensioner prejudice. Parliamentary Portfolio Committees, Parliament, Cabinet and the President should be wary of Bills initiated by institutions such as Ipec, and ensure that there is wide public consultations with the real stakeholders.

Martin Tarusenga, General Manager Zimbabwe Pensions & Insurance Rights, email: