Zimbabwe groaning under economic turbulences

Zimbabwe focuses on the economic challenges facing the nation since 2008. The economy is now resembling a run away train towards a bombed bridge. There is great economic improvements at the top with completely nothing at the bottom.

Yet without economic improvements at the grass roots, political progress may fonder. Zimbabwe needs a complete revolution on economic policy. Urgent policy challenges confront almost every aspect of the Zimbabwe's economy.  

Economic development implies an improvement in economic welfare through higher real GDP, but also through an improvement in other economic indicators, such as improved literacy, better infrastructure, reduced poverty and improved healthcare standards.

Policies for economic development could involve: Improved macroeconomic conditions (create stable economic climate of low inflation and positive economic growth Free market supply-side policies - privatisation, deregulation, lower taxes, less regulation to stimulate private sector investment. However the privatisation has caused a lot of problems in the country.

For a government to control the issues of bread and butter they must control the bakery industry. As the things stand the government has no power on bread prices. It can talk issue threats but as long as you are not part of its production you cannot control it. As a country we must have shares in these bakeries. The party must have its own businesses which will be able to feed the people should the economic sharks flex their blood dripping teeth towards the harmless Zimbabweans who now feel the pain of the price hikes.

Food is the political tool which gauges  the mood of the nation so its a shame that we do not as a government have control of the sources of basic food. We cannot dictate prices when we have nothing to offer. Issues which affect the day to day lives of the masses the government must have control and therefore be in the front seat when the masses are feeling the pain. Government interventionist supply-side policies – increased spending on 'public goods' such as food education, public transport and healthcare.

This could extend to Export Oriented Development. Reduction in tariff barriers and promoting free trade as a way to improve economic development. the government must encourage Diversification of both agriculture and manufacturing as a way to promote economic development.

The government must come with economical policies which are meant to encourage development and production.

Macroeconomic stability would involve a commitment to low inflation. Low inflation creates a climate where foreign investors have more confidence to invest in that country. High inflation can lead to devaluation of the currency and discourage foreign investment. To create a low inflationary framework, it requires: so relying on a currency which is not a currency is not helping the situation. The bond notes must be discarded as soon as now and Zimbabwe must adopt its own currency.  This would give the Reserve Bank independence to control inflation through using monetary policy. It is strange to have a monetary policy based on money which is beyond our control. Governing means control. We need to be able to control things to be in power. The government must have a disciplined expenditure. The presidential advisors is too large and on the ministerial salary we now have the largest cabinet in the whole world.

A potential problem of macroeconomic stability is that in the pursuit of low inflation, higher interest rates can conflict with lower economic growth – at least in the short term. Sometimes, countries have pursued low inflation with great vigour, but at a cost of recession and higher unemployment. This creates a constraint to economic development. The ideal is to pursue a combination of low inflation and sustainable economic growth. So the difficulties we  are facing now are just but temporary. They will pass the nation must be a bit patient with Mthuli.

It depends on the economic situation, some countries may be in a situation where there is a fundamental lack of demand due to overvalued exchange rate and tight monetary policy. Therefore, economic development may require demand-side policies which boost aggregate demand.

Macroeconomic stabilisation may involve policies to reduce government budget deficits. However, this may involve spending cuts on social welfare programs. Obviously looking with a common eye this will look like a failure.

As we have always said we must have Less Restrictive Regulation and Tackle Corruption. We need to deal with our judiciary system and make sure the corrupt people are punished.
Zimbabwe is being held back by over-restrictive regulation, corruption and high costs of doing business.  To attract both domestic and inward investment, it is necessary to remove these costs and create a climate which is conducive to business. To tackle corruption may not be easy, but it is often one of the biggest constraints to economic development.
 
Many people are abusing the name of the president. Fees are being charged to see the president if this is not dealt with now then we are far away from economic freedom.
We should deal with investors according to our laws Otherwise, economic growth may come at the expense of sustainable development.

Privatisation and De-regulation is important this was what saw China's rapid economic development, the decision to move from a Communist economy to a mixed economy made China an economic powerhouse. Several state-owned industries were privatised. This gives firms a profit incentive to cut costs and aim for greater efficiency.

De-regulation involves making state-owned monopolies face competition. This greater competitive pressure can help to create incentives to cut costs.

A potential problem of privatisation is that it can exacerbate inequality in society. privatisation must not enable a small number of oligarchs to gain control of key industries at low cost. Arguably, this does little for economic development because the nation's resources become owned by a small number of very rich individuals, and there is little ‘trickle down' to poorer members of society. If these people who own the wealth conspire against the government then we have anarchy as we are experiencing now.  
We must have Effective Tax Structure and Tax Collection system.

One of the challenges Zimbabwe faces is to effectively tax and collect what they are supposed to. If the government is unable to collect sufficient tax from the richest aspect of the economy there will be little funds to finance necessary public sector investment in services with a high social benefit.

The increase in value added taxes, tend to burden the poor more heavily than the wealthy.
Zimbabwe must encourage Investment in Public Services
In areas such as education, healthcare and transport, there is often market failure – the free market doesn't provide sufficient levels of education. A key factor in improving economic development is to increase levels of literacy and numeracy. Without basic levels of education and training, it is very difficult for the economy to develop into higher value-added industries.

Zimbabwe will come out of this abyss sooner than later.
We are in an economic War and indeed there will be casualties.
Raising an economy which was destroyed for 37 years is not a stroll in the park. It is hard and it is tough. The resilience of our people will take us there.

There is no need for a dialogue with the opposition for an economic growth. The irony of the Zimbabwean saga is that a GNU is not democratic but the funders of the opposition who claim to be democrats are pushing for a GNU.

If those who lose in elections will come in as equal partners then we do not have democracy. The opposition must bring their ideas not to hold the government at ransom. Zimbabwe will be up again with or without MDC. The pill is not sweet so is the illness. We have to brave it and hold on tightly. Zimbabwe is only facing these problems now but we will rejoice when all is done.

Vazet2000@yahoo.co.uk