Latest News Editor's Choice


Opinion / Columnist

Radical Economic Structural transformation REST (part 3 of 10)

11 Jun 2020 at 09:43hrs | Views
"No goods should leave our borders unprocessed and no goods should enter our borders that we cannot process and add value locally."

It was Ibbo Mandaza who wrote on "the failure of Zimbabwe- to move beyond political rhetoric while basically relying on colonial institutional architecture inherited from the past is the key reason for our lack of progress." He talks about "the failure to address the economic realm in favour of an obsession with the political kingdom."

He is indeed correct to state that: "Zimbabwe has so far been unable to break out of this colonial economic grid lock and a resultant class structure in which the absence of an indigenous capitalist (national bourgeoisie) is so glaringly lacking and, therefore, depriving the national economy of an anchor class without which it is difficult to effect economic transformation."

Radical Economic Structural Transformation or REST is really about fundamentally transforming our economic structure so that it can produce different results. Without changing the structure of our economy, we are unlikely to meet the diverse and growing needs of our population.

Zimbabwe today is classified as a fragile state by the International Monetary Fund. A fragile state is defined as a country that cannot generate adequate income and is therefore unable to meet its day to day needs, it is dependent solely on primary exports whose prices can fluctuate significantly and often, has high debt levels, pervasive corruption, lack of transparency and non-accountability. Our current economic structure therefore produces fragility and must change.

We therefore need an urgent plan of action through which Zimbabweans, on the basis of a national leadership that cuts across all sectors and sections of the society, can begin to chart the way forward, taking advantage of the historical foundations of the nation, the enormous natural resources, a resourceful population that includes among the most skilled at home and in the diaspora, and a pivotal position, both geographically and geopolitically, in the sub-continent of Africa.

First we need to restructure our GDP.
Our GDP reflects the totality of economic activity in the country which is creating value excluding the informal sector whose output is not measured. The first reality we must accept is that no country has ever created wealth through the production of primary goods alone without an industrial base.

Our current GDP comprises of 12% agriculture, 26% mining and quarrying, construction 14%, tourism 6%, manufacturing is mere 2.8% and services being the remainder.
If we are to radically transform our economy this structure has to drastically change to focus on high value add economic activity while reducing the share of agriculture and mineral primary products.

We have to focus on manufacturing because it spurs technological advancement and innovation while creating high end skilled jobs meaning more wealth and incomes. In addition, the production and services linkages created by manufacturing are enormous.

Under REST it is proposed that we target manufacturing to be about 40% of GDP within 5 years. This requires that we value add our primary products as a priority through agro based industrialisation and the processing of our mineral products. It also requires that more financial resources must be allocated to manufacturing and industry in our national budget away from primary agriculture and mining.
A more aggressive re-industrialisation strategy is therefore necessary. Such a strategy must be driven by the private sector while government should provide the necessary policies to allow industrial infrastructure development to compliment.  The rapid re-industrialisation and modernisation of Zimbabwe will be a separate topic to be addressed under REST.

Second we must restructure our Trade
About eighty percent of our exports are primary products which are subject to volatile international pricing and therefore continue to expose our export revenues to factors outside our control. Eighty eight percent of our imports are consumption goods which means that we are effectively exporting jobs and incomes with the little foreign exchange we are earning.

Under REST we are saying we must increase manufactured products from the current 5% of total export revenues to at least 30% in five years while reducing imports of finished goods to a minimum through a deliberate and clinical import substitution strategy which identifies all the imported goods we can produce locally per sector, agree on time lines to phase out imports and avail the necessary funding to build the necessary local capacity. The majority of our imports, at least 60%, should be raw materials for further processing and equipment and technology for productive purposes.

The key principle in restructuring our GDP and trade must be that "no goods should leave our borders unprocessed and no goods should enter our borders that we cannot process and add value locally."

Having agreed on the above, it will then be necessary to look at the key sectors such as agriculture, mining, industry, tourism and how we radically transform these into local value addition activities which can the drive our GDP and trade in the future.

Transforming our agricultural sector from primary production to an agro industry sector will be the next topic of discussion.

Vince Musewe is an independent economist and you can contact him on vtmusewe@gmail.com

Source - Vince Musewe
All articles and letters published on Bulawayo24 have been independently written by members of Bulawayo24's community. The views of users published on Bulawayo24 are therefore their own and do not necessarily represent the views of Bulawayo24. Bulawayo24 editors also reserve the right to edit or delete any and all comments received.

Subscribe

Email: