Zimbabwe; key factors to prosperity - part 2
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In my last article I identified some key factors for Zimbabwe's prosperity these being; leadership accountability, the efficient collection and allocation of financial resources, the use of technology to accelerate economic development and the respect and preservation of human capital so that all Zimbabweans have the opportunity to live up to their full potential.
Also read, Part 1.
Here I want to deal with the issue of the efficient collection and allocation of financial resources.
It is evident that Zimbabwe has suffered some institutional paralysis with regard to the effectiveness and efficiency in the collection and allocation of government revenues. In addition the banking sector has not particularly been the best allocator of resources. The recent closure and or curatorship of some banks due to bad loans reflect the challenges with regard to optimal resource allocation currently faced by some of our banks.
The curse of Africa is its inability to efficiently allocate and spend its resources mainly due to corruption and lack of capacity. Africa is not poor but Africans remain poor because corruption remains one of the most injurious practices that continue to contribute to the underdevelopment of Africa by Africans. Added to this is the lack of managerial capacity especially at public sector level where there is significant waste and mismanagement of resources.
The continuous over statement by Zimbabwe's minister of finance of expected revenues in every budget speech indicates a disconnect between what the state estimates should happen and what is actually happening. It is quite correct to assume that large amounts of funds are being externalized out of Zimbabwe at the expense of the fiscus. In addition to this, is the sheer waste of resources due to inappropriate priorities and a not so efficient tax collection regime. A good example is the recent comments by the minister of education that Zimbabwe is spending more on travel than education.The result is that the government both under spends and misspends on critical services leading to further deterioration of the standard of service it can render.
Zimbabwe will not only need to create new institutional capacity but a new value system within the public sector so that its resource allocation is optimal. Whether this is possible or not remains to be seen.
Zimbabwe needs an estimated US$10 billion for the rehabilitation of its infrastructure. That is a considerable amount that is likely to cause much grief if the corruption and inefficiency we are now witnessing continues. The rehabilitation of Zimbabwe's economy will be a challenge and will require a new and transparent approach in the management of public resources.
With regard to the financial services sector, I think our banks will need to have a bias towards developmental expenditure and creating access to capital for entrepreneurs without the onerous requirements of traditional banking practice. Financial institutions tend to create artificial barriers to entry for new players through their conservative lending approach. We will need to explore other funding mechanisms that appreciate that Zimbabwe needs to accelerate its development while, of course, managing the risk. We must therefore see a restructuring of the financial services sector both on the regulatory front and on investment philosophies. Pension funds, micro lenders, asset managers and private equity funds will have to play a leading role in reviving the Zimbabwean economy.
Having been in Zimbabwe for the last month, I have observed that red tape, slow decision making and a general lax in customer service have permeated both government and the private sector. This is disappointing and can be frustrating to entrepreneurs. Zimbabwe must up its game if we are to attract new investments and achieve social delivery objectives.
I do agree that the fundamental drawback is the current political uncertainties but I have also noticed high levels of negativity about the future especially in our local newspapers. Zimbabweans are inadvertently shaping a terrible future for themselves in their heads by anticipating the worst case scenario. Unfortunately what this does is that it creates a false momentum towards failure.
We need think positively because nobody is going to take this country to the next level except Zimbabweans themselves.
Vince Musewe is an independent economist currently in Harare and you may contact him on email@example.com
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Source: Vince Musewe
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