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Is Zimbabwe ebuilding or establishing a new economy?

10 Dec 2018 at 06:05hrs | Views
THE struggle to figure a way forward continues. The fire-fighting approach is the order of the day. Despite the various economic policy directions by the government, there is lack of clarity on where the country's economy is going.

We do not know if we are establishing a new economic base or repairing the old one. The government's long-term vision seems to be blurred by the desire to secure quick fixes and reduce dissent among the population. As a result, there has been a mix of seriousness and politicking on the government side, underlined by discernible desperation.

The men and women on the streets and in the villages are yet to feel the impact of the ambitious raft of policies introduced by the government. Establishing a new economy or rebuilding the old one will obviously take some time, but the people need to be put in that frame of mind so they can be realistic with their own expectations.

Notwithstanding the urgent need to address the symptoms of the current economic rot, it is vital to understand where we are today in relation to where we are coming from. This understanding must inform how we prioritise our approach on whether we are rebuilding or establishing a new economic base. As it is, we seem to be pursuing both and yet the factors that underpinned the previous economy have significantly shifted.

In 1980, the post-independence leadership inherited a well-functioning agro-based economy – the second biggest in Africa. Thus, as Zimbabweans, we have never created and established an economy of our own. We lack that experience – which is why we struggle to take off after destroying what was left by the former establishment. The economy we inherited was not only a product of sound economic policies, but largely a political decision premised on establishing a self-contained economy as a reaction to the sanctions imposed on Rhodesia by the British government and its allies.

There are important lessons to draw from the rise of the Rhodesian economy and its ability to maintain sustainability in the face of global isolation. The first lesson is that determination sees no excuses like the way our leaders pine and prattle over sanctions. This is linked to the second lesson, where we see the role of both shrewd political decisions and economics in the establishment of a solid economic base. A sound and solid economy is neither an outcome of randomness nor accident, but is based on a well-planned, defined strategic thrust on what industries to prioritise by the political leadership. Economic growth is largely an outcome of political decisions.

In the case of Rhodesia, after the Unilateral Declaration of Independence in 1965, the British government cut ties with the country. This included halting trade, removal from the Sterling area and Commonwealth preference system; and denying Rhodesia access to Britain's capital markets. The Rhodesian government responded by re-organising its economy. They prioritised agriculture, mainly food production to sustain domestic consumption. To achieve that, they further re-organised the agricultural sector, including establishing strong incentives for the farmers.

The thinking behind that approach was very simple. The rest of the sectors such as mining, chemical and engineering, construction, civil service, the service industry including the military that was fighting African freedom fighters would thrive if the agriculture sector produced enough food for the nation. A nation can only be healthy and productive when it can affordably feed itself.

Between 1965 and 1975 rapid growth in agriculture production transformed the economy as it not only supplied food to other sectors, but led to the rise and growth of a vibrant agriculture manufacturing and processing industry. The massive economic opportunities provided by the country's booming economy attracted thousands of skilled immigrants and ex-servicemen from Europe and the British Commonwealth into different sectors of the economy.

This is worth noting because raw materials such as minerals, rubber and oil and natural resources largely provided the real impetus for the colonisation of Africa, resulting from the industrial revolution and mechanisation of European industries which created an unprecedented demand for natural resources.

Agriculture was not at the top of the priority list. The re-prioritisation of agriculture by the Rhodesian government was triggered by the change in political and economic circumstances. Before 1965, mining was the principal sector of the Rhodesian economy.

While the mining sector played a significant part in Zimbabwe's previous economy, but the economy remained largely hinged on agriculture. When that economic base was politically tampered with in 2000, the entire economy tumbled. This is how the Rhodesian government had structured their economy and Zimbabwe needs to establish its own economic base.

It may still be agriculture but the thinking around it needs to change to suit the current dynamics and that message needs to be clear to investors than simply saying Zimbabwe is open for business. How much in dollars the country is spending on importing food is an easy sell to any investor because it simply means there is a ready market. Locally produced food and other agricultural products tend to be more affordable than imports and that will have an influence on labour costs and the general cost of living – another selling point to a potential investor.

With these in place, a market will emerge where participants exchange goods and services on terms they find mutually beneficial. Market processes, when freed from State interference, not only produce, distribute and allocate goods and services efficiently, but preserve and promote individual liberty and thus the growth of democracy.

Tapiwa Gomo is a development consultant based in Pretoria, South Africa

Source - newsday
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