Quick austerity measures to avert imminent economic collapse

Austerity is described as sternness, severity of manner or attitude. In other manner it is described difficult economic conditions created by the Government measures to reduce public expenditure. The question lies then is, those measures which the minister of finance put, are they real austerity measures? Zimbabwe could be facing the worst economic recession since independence, as most potential investors shun the Southern Africa nation. History tells it all that without dialogue we are heading nowhere, and the only solution lies in inter party dialogue and quick austerity measures to curb a serious crisis which is now a security concern. Everyone is affected across political divide. Some of the measures are too bookish and difficult to implement in Zimbabwe, given the historical context that Muthuli's past history and background was Europe.

New Currency Need a Strong Back Up

There are some few economists and other major players who want to influence the Government which is under intense pressure to change the economic landscape, to introduce a new currency. Let me warn them that this will not work. Our problem is not a currency issue, neither monetary but our major problem is structural governance. We have a problem on the structure. I will finish the subject of structure on my next article and documentary for now let me focus on the issue of the currency. You cannot introduce a new currency without a strong facility back up. There are two key major issues, strong facility back up and productivity. You cannot introduce a new currency without increasing the level of production. Currently, Zimbabwe is not producing anything, so what then it means is that whatever comes into the market will be eroded by the high level of demand and consumption. Mthuli once promised Zimbabweans, the issue of Afrimex bank facility, which they had intended to assist Zimbabwe. We need at least 5 billion (United States Dollars), for a kick start. So our problem is not monetary, but structural. As long as structural issues are not addressed, even if we get 5 billion today, within two weeks it will be consumed and eroded by the market. People have to get employed, then pay tax to the Government, there has to be activities into main stream economy, increase level of production, exports must be increased, provide advanced technology and at the same time, increase quality on anything we produce.

Appetite for Expenditure Must Be Dealt With (Eat What You Kill Policy)

Why do we have to buy cars which are very expensive when we don't have money in our coffers? Don't we have local talent which can supply vehicles for MPs, senators, chiefs, ministers and senior Government officials? We have a major problem, we can't control ourselves on expenditure. As we speak if it is true that, Muthuli Ncube is staying in a five star Hotel at the expense of tax payer's money, then what kind of austerity measures is he talking about? He has to fly to Switzerland at whose expense? War veterans are demanding money from which coffers? Recently MPs across political divide agreed to receive the SUV brand new cars at whose expense? We thought this is a group of people who will be representing us in Parliament and yet only to discover that very few notable ones who have sinister agenda.

Reduce the Number of Foreign Missions (Cutting Expenditure)

It is ideal to reduce the number of foreign missions worldwide. I would rather suggest that Government can make use of foreign missions which can add value to our economic woes. For example we can have one foreign mission for South Africa, Madagascar, Seychelles and other small countries within SADC region. Do we need any embassy in Malawi? Do we need any embassy in Mogadishu? Do we need any embassy in Iran? Russia? Or Equatorial Guinea? This is a waste of tax payer's money, we can reduce the number of those embassies and make use of that money to critical sectors such as health, education and tourism. We need to do away with issue of deputy minister, and as well merge other ministries to be one, for example we don't need ministry of ICT and information at the same time, and these can be merged to become one. Is it necessary for Presidency to attend all summits worldwide? It would be a good idea for him to make use of foreign missions abroad who can stand in for Presidency or Government.

RBZ Should Not Do Procurement

Reserve Bank of Zimbabwe must stick to its core mandate of lending and managing the monetary policies, fiscal policies and regulation of the official interest rates. Why is it then that the RBZ is involved in the quasci-fiscal activities which are supposed to be done by the ministry of Finance. There is absence of social contract, a strong currency is lacking as well, which then result in high cost of doing business. The rand debate was put in place to ease the USD forex pressure. We don't need to charge duty in USD but rather make sure all goods that are imported from different countries should be charged using the currency from that country. Those who import those goods should be allowed to sell their goods and products in foreign currency, and this will then results in as follows – prices of goods from neighboring countries will become more transparent, and will be more competitive. The corporates who plays a major role in importation of those goods, will no longer require USD from RBZ for their imports as well but they will use their rand and also collect from their sales. This idea of allowing RBZ officials to get involved in procurement is promoting nepotism and corruption. This must stop and come to an end. Once Muthuli Ncube re-aligns RBZ and introduce institutional reforms, the RBZ bank will resort to its old ways of lending money.

Institutional Reforms

This is where attempts to change institutions and the way they function. The underlying incentives and norms that shape behavior in organizations, rather than the formal organizational structures, rules and processes. The challenge for institutional reform in the past has been to identify institutions that are critical, shape reforms to achieve underlying functional change. The evidence base on public sector institutional reform in developing countries is smaller and draws on experience of civil service reform, decentralization, policy setting, policy formulation, and policy coordination, and institutional change in both formal and informal institutions. Institutions are implemented, shaped and changed by people. Reforming public sector in Zimbabwe, requires looking at the structure of the State and its Governance systems to identify where decisions are taken and how the various components connect. There are key perspectives that should be taken into account which are intra-state relations, how the core and sectors relate, and state- society relations, citizens engage in oversight relationships with policy makers and service providers, demanding goods and services.

Privatization Is Key for Non-Perfoming State Companies

Privatization is described as transfer of business, industry or service from public to private ownership and control. I was studying the privatization of state companies in Zambia which largely depend on copper, was not done in a proper way, instead it left Zambia with a lot of debts and economic gap which was largely reduced by a number of debts which were accrued during Chiluba's tenure. We have so many non-performing companies such as ZUPCO, MMCZ, ZISCO STEEL, ZMDC, NRZ and GMB. These state companies are occupied by a number of politicians which ran down most of these companies. These non performing companies are relying from state coffers and milking a large chunk of money and resources. In simple terms they are being bankrolled by the State, instead of supporting economic activities and paying tax to the Government. There must be a proper legal and economic reforms which must be led by respected academics, economists, policy makers and business community to deal with the issue of privatization once and for all.

Liberalize the Economy Period

I would suggest that instead of few individuals controlling the economy, why don't the Government allow some other major players on the market to do procurement and other logistics. For example, on fuel industry why having one person controlling the fuel industry? Why an individual bankrolling the whole some Government? We here command agriculture is being bankrolled by an individual, under what circumstances? Zimbabwe is big, we have respected human resource within and outside Africa, and you honestly tell me that more than 6 million people are dull that we can't participate in our economy? There are people who are benefitting from this scam purporting to be command agriculture, command fuel etc. there are Zimbabweans within and outside who can fund or supply enough fuel without any challenges. I urge Government of Zimbabweans to open markets to other people so as to enhance development.

Tinashe Eric Muzamhindo writes in his personal capacity as an academic, Policy Maker and project management consultant. He holds a B.A from Solusi University, M.A University of Lusaka and currently PhD ( Doctor of Philosophy) from Women's University of Africa by Research – student, and he can be contacted at tinamuzala@gmail.com