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Zimbabwe could draw valuable lessons from Singapore in the former's quest for economic growth

05 Oct 2018 at 19:17hrs | Views
SINGAPORE and Rwanda are exciting countries that may easily serve as case studies for other countries seeking a rapid reduction in their poverty levels. For the purposes of this article I will allow those with the requisite knowledge in politics to be the ones who comment on the political side of things with regards to these two countries.

My focus here will be on how the two countries have utilised economic policies to extricate themselves from demeaning poverty in a relatively prompt manner. Some readers may argue that Rwanda is not yet out of the murky mire of poverty, but surely no credible analyst could sensibly argue against the fact that the country has made some massive strides in development having generated average economic growth figures of around 8% between 2001 and 2013 with indicators of human development such as life expectancy and percentage of people living below the poverty datum line having concurrently improved. It is through studying and analysing how others have managed to accomplish that which we wish to accomplish that we could or are able to at the least cost learn the optimal economic pathways a country could traverse en route to development.

The one thing that is undoubtedly common in the developmental focus of the two countries is the fact that the respective political leaders of the two countries were unflinchingly determined to see their respective countries developed. In Rwanda, economic resuscitation was underpropped by curtailing corruption and kick starting previously stagnated economic activity through investing heavily in key sectors. In Singapore, the late Lee Kuan Yew, the man who founded modern-day Singapore, instituted a strong anti-corruption drive with legislated long prison terms for those who would have been found guilty of corruption. Mr Lee transformed a former British colony (an island) into a major manufacturing and financial centre through rapid industrialization policies.

Singapore adopted a fierce anti-corruption stance at its independence in 1965. The country has maintained that stance over the years which has seen it ranked as one of the least corrupt countries in the world. A strong stance against corruption ensures that leaders will not be easily influenced by personal gains into making decisions that are not beneficial to the country. Such a strong stance against corruption also promotes meritocracy. Corruption engenders nepotism. Meritocracy has the greatest ability to transform an economy fastest from a state of abject poverty to one of sustainable affluence. Even China, which lagged behind Singapore in development not so long ago, has also adopted a stern stance on corruption. Rwanda has also strengthened her anti-corruption initiatives and that has paid huge dividends for the country.

Corruption impairs a country's ability to attract significant investments. Singapore has no natural resources of its own but has managed to become economically successful by keeping its government small while aggressively pursuing efficiency within that small government. Inefficiency is a fertile breeding ground for corruption. When faced with inefficient service providers some people may be willing to pay bribes to get around the unnecessary bureaucracy. It is always the case that a small, efficient and honest government is not ordinarily characterized by byzantine rules and policies.

Corruption is a clear indicator of a breakdown of the rule of law. Singapore has flourished where others have floundered because of the country's officials' observance of the rule of know as opposed to reliance on bribes or favours or tribesman relationships. To quote one writer, the rule of law is the main force that transforms a society from a medieval one to a modern one. Medieval economies are not attractive to modern capital. Modern capital shuns medieval economies like all sane people shun the plague. It is said, in simple terms, that the rule of law applies when contracts are enforced and are enforceable.

The legal enforceability of contracts should not be dependent upon the depth of one's pocket, as was said by Prof Lumumba, but on the observance of the letter of the law. It is sad that at this day and age we still have, in Zimbabwe, some of a medieval mind set who are not even shy to abuse legal processes for the mere reason that they have access to corporate finances to so abuse. When a country has shown unequivocally that the rule of law is an inextricable and incontrovertible part of its legal infrastructure then meaningful investment could follow. No one would be ordinarily keen to invest in a country that is infested with corruption. Corruption is like the sand no one would want to build a permanent sky scrapper structure on with massive reinforcement thereon.

Investors are always on the lookout for safe destinations for their capital. Corruption drives away investors. One wonders why some individuals appear to be the untouchable ones that is the sacred cows in this undeniable fight against corruption that the country ought to be ferociously engaged in! Take, for instance, some individuals who are almost always accompanied by all manner of headlines (that the entire world gets to read) about this or that other new corrupt thing they would have done wherever they are bizarrely appointed to (yet nothing seems to be done to or about them). Corruption can hardly be halted by eloquent speeches alone, regardless of how sincere those speaking against it could be. Corruption can only be brought to an end through speedily and viciously albeit lawfully prosecuting and sentencing those who would have been found guilty thereof.

Singapore, China, Rwanda and all the countries that have registered significant economic growth figures in the not so distant past that I have studied have been relentlessly intense in their fights against corruption which had become endemic in their respective countries as it is in Zimbabwe. Granted legal processes have to be followed to the letter, corruption must be promptly dealt with fiercely.

If it means that the courts dealing with corruption have to be so busy that some cases have to be heard way into the night so be it. Stricter time frames for resolutions of such cases have to be legislated into law. Promptly prosecuting corruption cases could re-position Zimbabwe as a zero tolerance to corruption investment destination. That favourable label could lead to the country promptly discarding the corrupt tag which has only served to scare away investors from the country.

Zimbabwe is endowed with a lot of natural resources. Singapore has no natural resources. Natural resources may tend to become a poverty trap if the owners of the natural resources are clueless about how to exploit those natural resources to their advantage. Singapore has an amazing harbour which was built by the British along the Straits of Malacca. Western cargo ships had to stop in Singapore before proceeding to the rest of Asia. Due to its strategic location, Singapore capitalized on that and focused on building a major airport to support the sea transport industry. Zimbabwe has massive mineral deposits, how about leveraging on that by establishing a vibrant market for some of the country's valuable minerals within the country? Zimbabwe needs to adopt an export focused industrialisation policy. Everyone who has lived in Europe for a while having lived in Zimbabwe for the greater part of their earlier lives will bear testimony to the fact that European beef does not taste half as good as Zimbabwean beef. Zimbabwe had a vibrant state owned enterprise (Cold Storage Commission) which, at one time, used to export beef to destinations as far afield as the United Kingdom thereby earning the country the much needed foreign currency. Reviving such a market should not be too difficult for Zimbabwe especially after Brexit in view of the fact that some customers of Zimbabwean beef still have nostalgic feelings for Zimbabwean beef.  

Industrialisation is the true key to growth. An economy such as the Zimbabwean one ought to promptly transform itself from focusing on low-value adding activities into high value adding diversified, and high tech industrial activities. Agriculture is one of Zimbabwe's fortes and should be pursued with vigour. However, Zimbabwe stands to benefit little if all the country does is to export unprocessed agricultural products. Why not convert the tomatoes into tomato puree and earn more per kilogramme of tomatoes produced for instance? Why not process soy beans into soy milk for export purposes? So much could be done to the unprocessed agro-produce by way of value addition in order to earn the country the much needed foreign currency. One is amazed to observe mounds and mounds of unprocessed ore leaving the country for onward processing in places thousands of miles away. The country could do well to ensure that mining companies process the ore they mine in Zimbabwe within Zimbabwe.

Singapore's Lee knew that for Singaporeans to compete with global giants he needed to keep them happy. For those purposes he established a Housing Development Board as well as the Economic Development Board. The Housing Development Board transformed the space constrained Singapore (island) into a world class metropolis. The Economic Development Board gradually built up the Singaporean industries to provide employment opportunities which would enable the Singaporeans and expatriates to thrive in Singapore which by 2013 had a GDP per capita of US$55, 182.48 which figure was pegged at US$500 at independence in 1965!

Economic pragmatism on the part of policy makers is a key requirement for Zimbabwe if the country is to attain the goals she has set for herself. Practical choices are what the country desperately needs presently. The country should quickly move towards a truly non-alignment foreign policy. The country needs to be friends with whoever sincerely desires friendship with the country. The country should promptly institute trade friendly policies. Here, I mean both domestic trade friendly and foreign trade friendly policies. The country must relentlessly demolish archaic or outmoded business models. These should be replaced with contemporary models. Ministers should be encouraged to run their ministries as corporations.

Rwanda has achieved its enviable growth figures through massive investment into the economy by its ruling party owned holding companies that is Tri-Star Investments. Singapore developed through massive foreign investment into the economy which was attracted by a corruption-free environment which made Singapore a regional hub for multinational firms. Free trade attracted massive foreign investments by multinational giants like General Electric. Rwanda felt that she could not sit back and wait for foreign investors to lead the country to desired economic growth levels. The two countries that I chose as case studies appear to offer a dichotomous spread of the economic growth inducement poles. Zimbabwe does not necessarily have to religiously adhere to either model of investment. The country can thrash out some middle ground with a substitution of state-owned enterprises for the Rwandan style party owned holding companies. State-owned enterprises present the government with a massive opportunity to kick start the Zimbabwean economy. Since the government may not have much by way of free funds, it could be wise to partially privatise the majority of the state-owned enterprises. Even the strategic ones may need capital injection and that could come government's way through partial privatization with the government retaining majority shareholding in the really strategic ones only.

Though I will soon do an article on the Ease of Doing Business ratings and how Zimbabwe can improve on that, suffice for now of me to say that of the ten metrics covered in the Ease of Doing Business score, "Enforcing Contracts" should not be too difficult a metric to improve on for Zimbabwe. Zimbabwe has a number of pieces of legislation which could stand the country in good stead if contracts were enforced. t is amazing that we still have individuals among us who behave like Neanderthals who are still violating contracts of employment with impunity. Such actions tarnish the country's image and that is how it all starts. If a business man or woman for instance violates his/her employees' contracts with impunity and gets away with it, what will stop them from carrying forth their impish impunities or devilry to other forms of commercial contracts they are a party to? Zimbabwe needs to improve on the enforcement of contracts through establishing online databases of those, for instance, employers who wilfully violate employees' rights and those who violate terms and conditions of commercial contracts. An offenders' list of such type could serve as a deterrent to those who would be contemplating such obnoxious deeds!

In parting, Zimbabwe can only achieve growth through investment. The country can extricate itself from the deeply embedded inclement claws of bad policy induced economic kwashiorkor by creating an investment conducive environment. Investors ought to be lured to invest in the country. Zimbabwe should always remember that it is always in competition with all other economies for capital. Policies that make Zimbabwe an unsafe destination for capital will whisk away capital from the country to better destinations. Policies that make the country an attractive destination for capital will attract investment in and into the country. Zimbabwe needs to come up with robust policies that have the potential to make the country a destination of choice for capital. I wish for Zimbabwe's policy makers would start developing a tradition of caring for both domestic and foreign capital as opposed to a tradition of scaring capital away from Zimbabwe!

Prosper Munyedza  MSc B. Analysis & Fin (Uni. of Leicester), BSc (Hon) Econ (Uni. of Zimbabwe)
For feedback email: pmunyedza@yahoo.com



Source - Prosper Munyedza
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