Opinion / Columnist
Mthuli Ncube has a good plan
25 Oct 2018 at 01:42hrs | Views
Political legitimacy, economic bailout and the draconian Public Order and Security Act (Posa) and Access to Information and Protection of Privacy Act (Aippa) laws are some of the topics Zimbabwe's new Finance and Economic Development minister Mthuli Ncube addresses in this interview with NewsDay assistant editor, Alfonce Mbizwo.
ND: How is Zimbabwe going to get out of the current economic situation?
MN: You mean the economic malaise? I firmly believe that the Transitional Stabilisation Programme economic package is the way out of this because it clearly identifies the problem areas economically and also legislatively, but critically, we have a solution for each of these. The main issue now I think is about communicating clearly that this is a marathon, not a sprint and calling for patience. I know at times it's asking for too much by asking people to be patient and they'll say for how long? But that's how long it will take for the damage that has been done since 2000. It's difficult trying to fix things quickly and it will take time. There are, however, some quick wins which we can achieve.
One elephant in the room is jobs and I am planning on saying; let's propose a jobs indaba or summit just to concentrate our minds on that and then maybe this is something we can give incentives for; such tax incentives that are linked to job creation. The design is never simple, but at least try to make sure companies are rewarded through a tax system for creating apprenticeship opportunities and paying those apprentices. Job creation is a key issue in this country and everything we do must take account of jobs to say how many jobs are we creating in terms of the sectoral interventions we are implementing.
ND: Would that be a key issue when you are privatising parastatals or in terms of big infrastructure projects?
MN: Yes, every project must tell us how many jobs it is creating, how many SMEs (small and medium enterprises) it is going to support to make sure that this has a developmental impact we do in terms of sectoral support, the privatisation and infrastructure projects.
ND: You have said one of Zimbabwe's major problems is its credit rating internationally and the need to clear arrears?
MN: We are moving forward, the Lima Plan was a start. What we have now is called the Zimbabwe Arrears Clearance Roadmap because there are things in the Lima Plan which creditors want to see progress on. One of those was this economic reform package which I presented and which was accepted. So that's already changing the picture and also if you recall then we had a country in Africa that was going to be one of the sponsors. That's not the case this time, this time one of the sponsors will be one of the creditor countries themselves. So it's a different plan altogether. We are having conversations with all the G7 countries and there is a possibility of all G7 countries assisting at the same time in terms of bridging funding.
ND: Do you have a timeline for this roadmap?
MN: By this time next year, I would like us to have cleared the African Development Bank and the World Bank arrears, and we will have deep conversations on the Paris Club. By end of next year if all goes well, we should be having a debt restructuring plan by December 2019. But certainly, within the two years of the TSP, but the faster the better.
ND: And you are saying there is a lot of buy-in from creditor countries and organisations on this?
MN: Absolutely, there is buy-in on the economic reform programme, but also they want to make sure that on the political front, we make the progress as well, but certainly I know that progress will be made. The Americans have been very clear on Posa and Aippa in terms of amending those legislations and also on electoral reforms so that by the next election, some improvements will have been made and that is very important because what it means is that it will be an upper middle income country and the institutional environment must be such that it reflects that prosperous country which is inclusive to all.
ND: So the ConCourt ruling to strike off a part of Posa in last week's ruling works in the government's favour then?
MN: I saw that and that's already pointing in that direction. We need to make progress on some of these draconian laws. There are many ways to enforce the law.
ND: How does being a heavily indebted poor country (HIPC) fit into all this?
MN: The HIPC option is one of the options on the table when it comes to the Paris Club negotiations where we could take the HIPC route. We can't say we want to be HIPC, the creditors tell you through a negotiation process that they agree. It is an ad hoc route which requires sponsorship, so all options are on the table.
ND: In 2014, World Bank officials said Zimbabwe does not qualify as a HIPC country, what has changed?
MN: I have been in conversation with some of our creditors and they said we should leave the HIPC option also on the table. Let's have the best deal. We can only ask and someone on the other side can only say no. If you don't ask, you don't get.
ND: What's our obligation like to the Paris Club because that figure is never clear?
MN: It's about $2,8 billion
ND: If you had to talk at a political rally, not necessarily about politics, what would you tell the people experiencing a shortage of pretty much everything except rhetoric?
MN: I would say, look, our economy is sick; it was sick before and you know it yourself. What we are doing now, we are like doctors, we are providing medication and solutions to deal with these problematic areas, and I have tried to outline them, but I know this is all high language to most people. Things will get better, the patient must be patient. We have a good plan.
ND: Is there any chance of a quick bailout?
MN: But we are getting assistance already in the form of credit lines; we are building credit lines everyday. We would like to do it faster — we could have done it faster if we had cleared our arrears, otherwise we want a private sector-led economy. If we move to a full International Monetary Fund programme with resources in future, that's also okay, but those resources are never a big bailout in any case. But in my view, the biggest bailout will be arrears clearance and getting the private sector funded through credit lines, both domestically and internationally. The good thing is we have a lot of goodwill externally. With that support, we have to do our bit as well and we'll succeed.ND: How much is political will part of this goodwill?
MN: There is political will to do things. For a start, President Emmerson Mnangagwa said this time is about the economy. Elections are done, politics is done, we are focusing on the economy hard over these two years of the TSP and then five years after that for the subsequent plan. So it's about the economy and really committing to economic reforms is what we are about, and I have no doubt that there is political commitment. Of course, one can never over consult, we'll do that over time and make sure that no one is left behind in the consultation process.
ND: Some would argue that the bigger issue is around political legitimacy?
MN: Well, on legitimacy I think that is a strong argument. I keep hearing it. The ruling party won two-thirds majority in Parliament and that was not challenged. So, in other words, it was accepted on the ground.
On the presidential elections, we had a different picture. I am still asking myself if it is possible to overturn that majority to a point where the ruling party does not win the presidency? Then we had the judiciary getting involved to confirm the election result.
I think this confirms that the issue of legitimacy has been resolved because what else is left?
ND: How is Zimbabwe going to get out of the current economic situation?
MN: You mean the economic malaise? I firmly believe that the Transitional Stabilisation Programme economic package is the way out of this because it clearly identifies the problem areas economically and also legislatively, but critically, we have a solution for each of these. The main issue now I think is about communicating clearly that this is a marathon, not a sprint and calling for patience. I know at times it's asking for too much by asking people to be patient and they'll say for how long? But that's how long it will take for the damage that has been done since 2000. It's difficult trying to fix things quickly and it will take time. There are, however, some quick wins which we can achieve.
One elephant in the room is jobs and I am planning on saying; let's propose a jobs indaba or summit just to concentrate our minds on that and then maybe this is something we can give incentives for; such tax incentives that are linked to job creation. The design is never simple, but at least try to make sure companies are rewarded through a tax system for creating apprenticeship opportunities and paying those apprentices. Job creation is a key issue in this country and everything we do must take account of jobs to say how many jobs are we creating in terms of the sectoral interventions we are implementing.
ND: Would that be a key issue when you are privatising parastatals or in terms of big infrastructure projects?
MN: Yes, every project must tell us how many jobs it is creating, how many SMEs (small and medium enterprises) it is going to support to make sure that this has a developmental impact we do in terms of sectoral support, the privatisation and infrastructure projects.
ND: You have said one of Zimbabwe's major problems is its credit rating internationally and the need to clear arrears?
MN: We are moving forward, the Lima Plan was a start. What we have now is called the Zimbabwe Arrears Clearance Roadmap because there are things in the Lima Plan which creditors want to see progress on. One of those was this economic reform package which I presented and which was accepted. So that's already changing the picture and also if you recall then we had a country in Africa that was going to be one of the sponsors. That's not the case this time, this time one of the sponsors will be one of the creditor countries themselves. So it's a different plan altogether. We are having conversations with all the G7 countries and there is a possibility of all G7 countries assisting at the same time in terms of bridging funding.
ND: Do you have a timeline for this roadmap?
MN: By this time next year, I would like us to have cleared the African Development Bank and the World Bank arrears, and we will have deep conversations on the Paris Club. By end of next year if all goes well, we should be having a debt restructuring plan by December 2019. But certainly, within the two years of the TSP, but the faster the better.
ND: And you are saying there is a lot of buy-in from creditor countries and organisations on this?
MN: Absolutely, there is buy-in on the economic reform programme, but also they want to make sure that on the political front, we make the progress as well, but certainly I know that progress will be made. The Americans have been very clear on Posa and Aippa in terms of amending those legislations and also on electoral reforms so that by the next election, some improvements will have been made and that is very important because what it means is that it will be an upper middle income country and the institutional environment must be such that it reflects that prosperous country which is inclusive to all.
ND: So the ConCourt ruling to strike off a part of Posa in last week's ruling works in the government's favour then?
MN: I saw that and that's already pointing in that direction. We need to make progress on some of these draconian laws. There are many ways to enforce the law.
MN: The HIPC option is one of the options on the table when it comes to the Paris Club negotiations where we could take the HIPC route. We can't say we want to be HIPC, the creditors tell you through a negotiation process that they agree. It is an ad hoc route which requires sponsorship, so all options are on the table.
ND: In 2014, World Bank officials said Zimbabwe does not qualify as a HIPC country, what has changed?
MN: I have been in conversation with some of our creditors and they said we should leave the HIPC option also on the table. Let's have the best deal. We can only ask and someone on the other side can only say no. If you don't ask, you don't get.
ND: What's our obligation like to the Paris Club because that figure is never clear?
MN: It's about $2,8 billion
ND: If you had to talk at a political rally, not necessarily about politics, what would you tell the people experiencing a shortage of pretty much everything except rhetoric?
MN: I would say, look, our economy is sick; it was sick before and you know it yourself. What we are doing now, we are like doctors, we are providing medication and solutions to deal with these problematic areas, and I have tried to outline them, but I know this is all high language to most people. Things will get better, the patient must be patient. We have a good plan.
ND: Is there any chance of a quick bailout?
MN: But we are getting assistance already in the form of credit lines; we are building credit lines everyday. We would like to do it faster — we could have done it faster if we had cleared our arrears, otherwise we want a private sector-led economy. If we move to a full International Monetary Fund programme with resources in future, that's also okay, but those resources are never a big bailout in any case. But in my view, the biggest bailout will be arrears clearance and getting the private sector funded through credit lines, both domestically and internationally. The good thing is we have a lot of goodwill externally. With that support, we have to do our bit as well and we'll succeed.ND: How much is political will part of this goodwill?
MN: There is political will to do things. For a start, President Emmerson Mnangagwa said this time is about the economy. Elections are done, politics is done, we are focusing on the economy hard over these two years of the TSP and then five years after that for the subsequent plan. So it's about the economy and really committing to economic reforms is what we are about, and I have no doubt that there is political commitment. Of course, one can never over consult, we'll do that over time and make sure that no one is left behind in the consultation process.
ND: Some would argue that the bigger issue is around political legitimacy?
MN: Well, on legitimacy I think that is a strong argument. I keep hearing it. The ruling party won two-thirds majority in Parliament and that was not challenged. So, in other words, it was accepted on the ground.
On the presidential elections, we had a different picture. I am still asking myself if it is possible to overturn that majority to a point where the ruling party does not win the presidency? Then we had the judiciary getting involved to confirm the election result.
I think this confirms that the issue of legitimacy has been resolved because what else is left?
Source - newsday
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