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Conducive environment key to economic growth

Paison Tazvivinga Development Economist
The first two months of 2022 have been awash with two main events that are likely to define the year for Zimbabwe.
The impasse between government and teachers as the later declared incapacitation and the former interpreted it as lack of patriotism (commitment) hence it threatened that all those who failed to report for duty will be considered to have resigned;
The MDC Alliance led by advocate Nelson Chamisa launched a new party going by the name Citizens Coalition for Change (CCC).
Headlines circulated as a response to the move, with some pointing to it as, conceding defeat of the battle for party name to another faction leader, Douglas Togaraseyi Mwonzora.
For now let’s agree to shelve the CCC issue and delve more on the impasse between government and teachers.
Teachers, and the rest of the civil service, are operating under harsh circumstances marred with a meagre average monthly income against a food poverty line for one person of ZWL$6 153 (an increase of 6,8% from December 2021) and a total consumption poverty line for one person of ZWL$8 496 in January (a 6,1% increase from December 2021).
As per Zimstats (2022) communique, “the food poverty line represents the amount of money that an individual will require to afford the minimum required daily energy intake of 2 100 calories, whilst the total consumption poverty line represents the total income needed for an individual (with all their income added together) as a minimum for them not to be deemed poor.”
The above figures show that only a few are making it above the poverty datum line.
The argument from the government is lack of funds to push the salaries way high.
We all understand that the government’s main source of revenue is taxes.
A cursory look at Zimra’s revenue heads contribution shows that companies’ tax proportion for fourth quarter 2021 was 20,18% whilst that from VAT on local sales was 14,42% of total revenue heads contribution (Zimra, 2022).
This highlights the importance of companies in contributing to the national fiscus.
However, for these companies to be profitable, they need to operate in an environment that allows them to grow and contribute more taxes whilst simultaneously creating employment.
Zimbabwe has not been so forthcoming with regards to that.
One can easily pick a case in point without even painting a black picture about the whole situation.
For example, one of the issues that has been bedevilling these businesses for a very long time now is energy.
Electricity supply has been erratic in Zimbabwe.
This is despite the fact that we have one of the biggest rivers in the world (the mighty Zambezi River) and one of the biggest dams in the world (Kariba dam).
Electricity is fundamentally important as a means of production as it facilitates production – production drives economic growth and growing sectors create employment – employment improves people’s incomes, thus reducing poverty.
The multiplier effects of a growing industrial and commercial sector are so enormous to address some of the challenges that we face today as a nation; which include among others; unemployment of the vast army of tertiary graduates; poverty and increased inequality.
Zimbabwe’s poverty and inequality levels are among the highest in sub-Saharan Africa.
In 2019 the poverty rate at US$1,90 was 39,5%, close to the sub-Saharan average of 41% (Knoema, 2021).
The GINI index was slightly above 50 at 50.3.
To address poverty and inequality there is a need for deliberate policy stances. Economic growth alone will not address these dual challenges.
It must be understood that poverty and inequality can only be addressed in three ways which are; when people get employment in a growing sector; when people create employment for themselves through SMME development; and through government income distribution strategies such as social safety nets (grants, scholarships and other subsidies).
So, the nation needs well-crafted deliberate policy actions that can address these issues and the best way to do so is to strive towards nation building which incorporates inclusive growth.
Like the NDS1 emblem says, “It is the pursuit of this vision which will deliver broad-based transformation, new wealth creation and expanding horizons of economic opportunities for all Zimbabweans, with no one left behind.”
It is paramount that everyone enjoys the fruits of improving economic performance.
Inasmuch as the country is registering some positives in road construction, GDP growth and budget surpluses, at the onset of the second republic, it is also a fact that we are witnessing increased disparities between the rich and the poor (a sharp contrast to NDS1 and Vision 2030).
Sadly, it is also becoming a fact that within our borders, poverty is increasingly being defined by one’s political inclination – with those identifying with the ruling party becoming richer and the other group becoming poorer.
We are now witnessing two different worlds – the political world that has and the apolitical world that has not.
This narrative has to be changed so that we build social cohesion with a unity of purpose and drive towards nation building embedded in one vision and one country.
That is the surest way to bring about the much-needed social engineering (transformation) to uplift millions out of poverty (including the majority of civil servants who have been subjected to starvation wages and whose lifestyles are now a pale shadow of their former selves).
There is a need for consensus and singularity of purpose from government, labour and civil society.
History teaches tell us that there is no country in the world that has achieved nation building without such consensus.
Also, no country in the world has been able to achieve sustainable inclusive growth without a sense of patriotism from its citizens.
So, achieving islands of growth in a sea of increased inequality and widening rift between labour and government is a self-defeating process that holds us in a perpetuating cycle of half-baked solutions.
As the economy grows, authorities must ensure that the benefits thereof are distributed among all income levels and enjoyed by all.
This can then be complimented by creating a conducive environment for business operations so that entrepreneurs can thrive.
Such an environment should also make it possible for both government and business to offer competitive packages that lure and retain talent to drive innovation and compete in a global market.
We get a very good lesson on the importance of the environment from a farmer.
Like Dr Bonang Mohale (2018) puts it, a farmer does not spend much of the time massaging individual seeds but s/he spends more than 80% of the time preparing the ground (environment) for the growth of those seeds.
Because, if the ground is right, the harvest will come, 10-fold.
Likewise, if the economic environment is right then we can all enjoy the fruits of a prosperous nation, regardless of gender, race, age and political affiliation.
It is such an environment that we envisage; an environment where corruption is a punishable act not a source of pride; an environment where government institutions uphold their values and ethics; an environment replete with policy consistency which facilitates long term policy planning; an environment where the government has confidence in its own currency and takes pride in receiving payment of its goods and services in the local currency.
Maybe, if we get that right then we may witness inclusive economic growth that has been elusive over the past two decades.
  •  Tazvivinga is a development economist and can be reached on ptazvy@gmail.com.          These weekly New Perspectives articles, published in the Zimbabwe Independent, are coordinated by Lovemore Kadenge, an independent consultant, past president of the Zimbabwe Economics Society and past president of the Chartered Governance & Accountancy Institute in Zimbabwe (CGI Zimbabwe). — kadenge,zes@gmail.com or mobile: +263 772 382 852.

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