Source: Use intellectuals to solve economic problems | The Herald October 5, 2017
Dr Gift Mugano
Zimbabwe always comes up with policies, which are not fit for purpose. Unlike medical doctors, we have not diagnosed our problems in the majority of times, but instead we have prescribed medicine without telling the “patient” the potential side effects of taking the drugs nor the appropriate time to try other medicines.
In a number of cases, we have seen refusal of the prescription to an ailment maligning the economy. An example would be as the case of the civil servants bonus, which other Cabinet ministers insisted Treasury should pay when the Minister of Finance Patrick Chinamasa had proposed that the 13th cheque be skipped last year. Yet in our day to day life we have seen that patients who refuse to take drugs or the doctor’s advice die. This is the same scenario playing out in the economy at present.
The reaction by the Government to address commodities shortages is not sufficient to stem out the problems. In short, we do not have enough solutions. Hence, I am pushing for the use of intellectuals in addressing economic challenges. Our economy, in this case, is a patient. It needs medical attention. If intellectuals agree that trade, industrial and fiscal policies are the most relevant policies at this stage, to help direct this economy on to the right path, the focus of discussion, which must be informed by good research, should be centred on how we can attract investment, address our tax regimes (fiscal policy) to encourage production and promote savings.
Zimbabwe is in dire need of both domestic and foreign investment. High levels of investment are key in building the country’s productive capacity. Zimbabwe is receiving the least foreign direct investment compared to other countries in the southern Africa region. Zimbabweans themselves are not investing much in their own economy, which is a tragedy because there is no investor who will invest in a country where locals are not confident to invest. In order to drive up investment, we need think tanks focusing on unpacking the impediments to attracting investments and proffering right solutions.
With respect to the fiscal policy, we need to work around how the national budget, from the tax perspective, can be used to stimulate production while at the same time managing the fiscal requirements. Zimbabwe is one of the highly taxed countries in Sub Saharan Africa. In the mining sector, for example, there is an ongoing cry over multiplicity of taxes, which is both stifling the sector’s capacity to remain competitive and attract fresh capital.
Whenever there is talk about proposals to deal with excessive taxation in the mining sector, I always come across the phrase “ . . . there is need to rationalise taxes in the mining sector . . .” This is not a recommendation which is implementable. The Minister of Finance cannot do much through his budgets with this kind of advice.
As such, we need think tanks or intellectuals to come up with a number of strategies targeted at specific tax measures to be take, that are conditional. For instance, crapping royalties if fresh investment of defined threshold is made. Such development has mutual benefits for treasury and the mining sector. We need to build a savings culture. Simple economic theory tells us that savings are identical to investments.
This means that a country requires savings in order to grow investments. Zimbabwe is stuck in a long history of economic agents and households losing their hard-earned pensions and money in local financial markets. Hence, because of this background, especially now when it is very difficult to access cash from the banks, it is a not easy to encourage people to save. It therefore calls for thorough and rigorous research work around the problems Zimbabweans endured, to proffer lasting solutions.
We cannot continue to say because of yesterday we are not going to save. It is as good as running away from one’s own shadow. The bottom line is that running an economy is a complex undertaking requiring expertise. There is need to invest in research that addresses our economic problems. If we are to solve our economic challenges in a sustainable way we must not do short cuts. We must diagnose the economy, like the medical doctors do and give prescriptions the same way medical doctors do. Zimbabwe is blessed with renowned intellectuals and we must use them.
The big question is who should be response for driving new investment and how can think tanks or intellectuals effectively play their role in planning this economy?
Both our private sector and the Government must shoulder the blame regarding failure to fund relevant research. In other countries, the national budget, for example, dedicates an equivalent of 5 percent of gross domestic product towards research. In South Africa, they have a National Research Fund, funded by treasury to carry out regular research aimed at informing policy. In some cases, the research is carried out five years in advance.
By the same token, private sector in South Africa actively commission research by think tanks. The commissioned research will form the basis for their dialogue with Government.
I must say that think tanks and academia have a responsibility to lead in providing solutions to the economic problems but we must always remember that it is the sick who need a doctor. It has never worked anywhere to see the doctor going after patients.
Together we make Zimbabwe great!
- Dr Mugano is an author and expert in Trade, Investments and Development. He is a Research Associate at Nelson Mandela Metropolitan University and a Senior Lecturer at the Zimbabwe Ezekiel Guti University. Feedback: Email: firstname.lastname@example.org, Cell: +263 772 541 209.