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You are on the right path Mthuli but....

by Munyaradzi Hwengwere
05 May 2019 at 08:44hrs | Views
I can't help but feel sorry for Finance and Economic Development Minister Professor Mthuli Ncube.

By now the economy should have been showing signs of stabilising.

Experts say for the first time since independence, or even during the UDI (Unilateral Declaration of Independence) period (1960s), the fiscal side has experienced a budget surplus.

In fact, during the January to March period, a cumulative surplus of $485 million has been realised and the trend is still continuing.

And thanks to the 2 percent Intermediated Money Transfer Tax, Zimra has since surpassed its targeted revenues by double digits.

Also, in Bulawayo, where the Zimbabwe International Trade Fair (ZITF) was taking place, the number of exhibitors have been the highest in six decades.

Organisers had to erect tents to accommodate the spillover.

So clearly there is a lot of good news to feed on.

Investors in the capital-intensive mining sector continue coming through, with the latest being the reviewed deal for a US$5 billion steel manufacturing plant in Mvuma, which was signed recently and witnessed by President Emmerson Mnangagwa.

Zimbabwe and South Africa are the largest producers of chrome, but because they both compete on the primary product, their share of income is relatively low.

Both are also vulnerable to the vagaries of international commodity prices.

As such, moving up the value chain is more than just a significant development for the country, for it is expected to cushion the nation from the adverse effects of volatile global chrome prices while also unlocking industrial growth.

The Chamber of Mines of Zimbabwe 2018 mining sector survey report indicated that the mining sector is mainly hamstrung by an overreliance on steel imports.

Most often, a significant chunk of the US$2 billion generated from the industry is immediately channeled to import a product that is no longer being produced locally, especially after the closure of Ziscosteel.

However, after realising that the country is for the first time on the right path in growing its chromium industry, the International Chromium Development Association (ICDA) has chosen Zimbabwe to host its 35th Anniversary from May 7 to May 9 this year in Victoria Falls.

And this is yet another key milestone.

Declining Imports

Encouragingly for the economy, imports declined by close to 90 percent in the first quarter.

It is now rare to find imported biscuits in Zimbabwe.

Local products are now dominating most local shop-shelves.

The "Buy Zimbabwe" message is now a reality for most businesses that have come to realise that the United States dollar is expensive.

Those that have chased it on the parallel market have also come to understand that consumers are not gullible and, thus, will not buy a product if they cannot afford it.

Bread manufacturers too might soon realise that at RTGS$3,50 per loaf, they may soon start eating their own bread.

Who says there are no alternatives to bread?

The Consumer Council of Zimbabwe (CCZ) perhaps needs a kick in its backside to promote the power of the consumer against businesses that are stuck in the 2008 hyper-inflation period and believe their role is to increase prices in spite of the low disposable incomes obtaining on the market.

Wake up CCZ! There is a job for you.

The feel-good factor has even spilled into sport.

Even perennial underachievers, the man's national soccer team, the Warriors, have qualified for the African Cup of Nations (Afcon) as group leaders for the first time.

And the national cricket team, the Chevrons, managed to get even with the

United Arab Emirates (UAE), which prevented us from qualifying for the World Cup.

So, clearly, good news is in abundance.


Sadly, sentiment on the ground has really gone south.

Consumers and businesses seem to believe that the country is going through one of the worst economic periods.

The disconnect between the rosy picture that is being painted by the Treasury chief Prof Mthuli Ncube and the perception on the ground is quite apparent.

Essentially, salaries and wages have been eroded as the RTGS dollar continues to lose ground against the US dollar on the parallel market.

Inflation still remains very high.

Companies are struggling to meet employee expectations.

So how is it even possible to reconcile these gaps and ensure that the country focuses on the good while also nursing the current pain of austerity?

Fundamentally, Minister Ncube should know that the trickle-down effect of the budget surplus doesn't cascade to consumers' shopping carts in the short term.

It might seem that a budget surplus is merely a pie in the sky for consumers who are surviving from pay cheque to pay cheque.

This is even made worse by the lingering experiences of the 2008 hyper-inflationary period. Failure to clearly spell out well-intentioned economic reforms is inexcusable.

Economies are made for people and, thus, all economic models must necessarily seek buy-in from envisaged beneficiaries.

Merely explaining that a surgical operation would involve pain without taking the necessary steps to manage the pain would not cut it. The doctor needs to be empathetic as well.

Historical experiences of the liberation struggle taught us that a mobilised population will even sacrifice limp and life as long as they understand the end goal.

We definitely still need to put this message across.

Perhaps the mistake made was to emphasise austerity instead of focusing on prosperity.  Austerity is the means, not the end.

Predictably, locals are feeling the austerity and are yet to experience the prosperity.

When Zambia was going through the same experiences in 2005, their Ministry of Finance introduced the cultural remodeling programme.

Essentially, the programme was meant to ensure that citizens could readily connect the various activities on the ground to various programmes that were being implemented.

Secondly, the programme was designed to motivate the population to better understand their role in enhancing national productivity.

As a result, citizens got to realise their role in building prosperity.

The recently released inaugural Agricultural Sector Survey 2019 shows that most communal farmers produce 0,5 tonnes of maize per hectare, compared to commercial farmers who average 3 tonnes per hectare.

So unless we increase their productivity, most of them will remain poor.

And as prices continue to soar, they see Government as the problem.

They, however, fail to realise that they are part of the equation.

So we need to embark on a campaign where Zimbabweans understand that economies are not driven by Government alone since they, too, can play a role in shaping the future they want. There has to be a national narrative focusing on the good.

Perceptions must, therefore, be carefully managed. Of course, the starting point is to embrace the concept of inclusivity and national ownership of the agenda.

What President Mnangagwa has done with the national clean-up campaign should be used as a model to rally everyone around the narrative that they can also play a role in driving the economy.

Minister Ncube must not worry too much because many of the things he is doing are really working.

But the man on the street, confronted by ever-increasing prices, will continue seeing things differently. This, however, can be changed through a model that appreciates that inclusivity and ownership can move the nation from gloom to hope.


Source - sundaymail