What is happening in the country calls for a proper in-depth survey of the economy to learn the issues facing it in a much-needed greater depth and breadth.
By Tinashe Kaduwo
The authorities have implemented a series of policies to try to turn around the economy, but sadly to no avail.
Economic growth has turned negative, while inflation is slowly approaching the dreaded hyperinflationary era levels. Indeed, there is something amiss with our policy planning or the diagnosis of our economic problems, a call for a comprehensive survey. This is important to plan for improving the economy and taking it towards the “new Zimbabwe” that every citizen desires. Extensive team of economic researchers, national and international experts, with a mix of orthodox and heterodox subject specialists should be formulated for surveying the economic realities and giving appropriate recommendations. This should be done for all the four main sub-divisions of the economy, real, fiscal, monetary or financial and external. The scope should be covering underlying institutions or ministries, organisations, government departments, semi-autonomous entities, private sector firms and markets to unpack the real developments and proper policy recommendations. Inventive structures, both positive incentives in the shape of subsidies and tax relaxations, and negative in the shape of taxes, along with governance structures, needs also to be surveyed for these four economic sectors, gaps to be highlighted and policy input eventually shown the way.
What is clearer in the economy is that there seems to be a gap in the understanding of how markets are operating in the country. Policymakers and authorities need to make an exhaustive effort to understand first-hand issues facing the markets of all four sub-divisions of the economy, that is real, fiscal, monetary or financial and external divisions. To make clearer the extent of this effort, there is need to understand the institutional mechanisms governing the workings of, for example, major cattle market in Mt Hampden and then make a survey of the pricing practices as against the rules enshrined in the institutional mechanisms. Similar efforts need to be done in other real sector markets, along with markets in the overall economy.
The authorities need to understand that understanding the micro-economic foundations are paramount for successful macroeconomic policy, which calls for having this research team. The research team therefore, will need to internalise micro-economics foundations. Also, the lens for making analysis that has been shifting in mainstream economics since the Global Financial Crisis of 2007/08 — whereby the economy is not just seen the neo-liberal Washington Consensus way, but from heterodox points of view, needs also to be adopted. Heterodox institutional and political economic contexts are being increasingly employed to gauge the soundness of economic institutions, and the ability of economic growth to deliver on equity and poverty concerns. The survey will indeed prepare a proper ground work for policy in general, and will lay a strong foundation for budgetary considerations.
For example, unlike what many of our economic gurus would suggest as a main pillar for resolving our fiscal imbalance, the Swedish government did not go for outright privatisation of state-owned enterprises, but rather improved its own effort and ran them successfully. Similarly, in Finland the government took it upon itself to provide education to its citizens, not over-emphasising the need for the private sector to lead this effort; now Finland prides itself of having the best education system in the world.
Too much emphasis is being given to budget deficit and currency. There is not much focus on institutions and the costs and benefits of policies such as mass privatisation of parastatals. Money alone does not deliver a lot on needed results, especially of growth with equity, even when there is more money available.
Kaduwo is a researcher and an economist. — email@example.com