ZimAsset situational analysis: fact or fallacy?

In October, Zanu PF launched the Zimbabwe Agenda for Sustainable Socio-Economic Transformation (ZimAsset), a development programme extracted from the party’s election manifesto, a plan modelled along China’s development programme which is expected to revive the economy in the next five years. The plan proposes to leverage the country’s natural resources to source external capital. The programme is a two-pronged approach—the quick fix (2013-15) and the long term—dealing with the woes confronting the economy. Typical of previous development plans created by the party over the years, the issue of economic sanctions is emphasised.

Some political analysts have criticised the document as lacking depth because it was hurriedly produced.

This was also confirmed by Energy and Power Development permanent secretary Partson Mbiriri, who admitted that the blueprint was put together in the run up to the July 31 harmonised elections as Zanu PF anticipated a landslide victory.

“ZimAsset is an exception in that it was put together just before elections by officers quietly. They worked on the document in anticipation of the outcome that we had. There were special circumstances surrounding this document,” Mbiriri said.

Addressing delegates unpacking the Zim Asset at a recently held forum in the capital, University of Zimbabwe Department of Economics chairman Phineas Kadenge expressed concern over the language used in the programme, noting that it sounds like a political party document as the language used is sometimes temperamental.

He gave example of the statement in the executive summary which talks about “after landslide victory” yet the plan is supposed to have buy-in and resonate at the national level.

Kadenge observed that the compilation of such documents should be done by technocrats and their language should be all-encompassing.

The document, he said also talks about “sanctions” and yet the government wants to take it for financing to institutions such as the IMF and World Bank. Though there is nothing wrong with taking a proactive approach especially when the economy is underperforming, critics say Zim Asset, like other economic plans, could face the same fate faced by other programmes.

Lack of political will to address key issues such as corruption, some analysts say, could render Zim Asset nothing, but a wish list for a desperate nation. In closing the Zanu PF conference, President Robert Mugabe subtly admitted that the country was in dire need of cash.

He challenged Finance and Economic Development minister Patrick Chinamasa to up the game and source capital from the mining sector, now the anchor of the economy. “Find money Chinamasa,” Mugabe told thousands of supporters including Chinamasa.

“You can’t say there is no money. Where is our platinum going? Where is our gold going? Where are our diamonds going? The budget must tell a new story. Those who work must be paid above the poverty datum line. We can’t really be at peace with our hearts if we say our people must continue to work for next to nothing.”

MDC-T secretary general and former finance minister Tendai Biti on Tuesday said Zim Asset, which is expected to give direction to the National Budget, will not achieve its desired objectives.

“I do not think Zanu PF has capacity to implement any full programmes other than rigging elections and programmes to come into power. They do not have the common people at heart and we noticed that with programmes like STERP and the government work programme.

One thing that will be interesting in the budget is to check out the gap between the budget and Zim Asset. You only need to go to one graph of macroeconomic projections and you will see how different it will be from Zim Asset,” he said.

The Zim Asset document envisages that the economy is projected to grow by an average of 7,3% in the five –year period from 2013 to 2018. The economy was expected to grow by 3,4% in 2013. The results of the projection will be known after today’s budget presentation.

Zimbabwe, since the early 1980s, has been coming up with economic plans that included Transitional National Development Plan 1983-85 and the First Five Year National Development Plan 1986-90. This was followed by the Second Five Year National Development Plan 1991-95 also known as the Economic Structural Adjustment Programme (ESAP).

From 1996-2000 the country adopted the Zimbabwe Programme for Economic and Social Transformation among others. When the country introduced the multicurrency it adopted the 100 days Short Term Recovery Plan (MTP) 1 and 2, Medium Term Plan which had plans to 2015.

The MTP was abandoned when ZimAsset came into the picture.
Zimbabwe is endowed with natural resources that are in abundance and these include rich mineral deposits, arable tracks of land, flora and fauna, abundant sunlight and water. Furthermore, one of the resources that gives Zimbabwe a comparative advantage over regional and other international countries is its economic complexity, that includes the strong human resource base, which is an outcome of a deliberate educational policy instituted by the Zanu PF Government at Independence in 1980.

Excerpt from the ZimAsset document

Source: Zim Asset

Zimbabwe’s economic complexity as defined in the Atlas of Economic Complexity, Mapping Paths to Prosperity, reflects the immense social accumulation of knowledge that has been embedded in the socio-economic ecosystem and productive structures of its economy. This may explain the resilience of the economy in the face of the debilitating illegal economic sanctions. Given the knowledge base and productive resource endowment of Zimbabwe, the country is projected to be a growth leader in Sub-Saharan Africa towards 2020.

Fundamentally, the effective and efficient utilisation and exploitation of these comparative advantages places Zimbabwe on a pedestal for robust economic growth, development, and prosperity as well as social cohesion. Zimbabwe experienced a deteriorating economic and social environment since 2000 that was caused by illegal economic sanctions imposed by the Western countries.

This resulted in a deep economic and social crisis characterised by a hyperinflationary environment, industrial capacity utilisation of below 10% and an overall cumulative Gross Domestic Product (GDP) decline of 50% by 2008. In the social sector, health and education were also adversely affected with people succumbing to cholera and other epidemic diseases, while the quality of education was compromised, as evidenced by the growing number of school dropouts and low pass rates in primary and secondary levels.

Agricultural production was also severely affected, resulting in the country depending on imports to meet the demand for domestic consumption and industrial needs. Furthermore, these challenges led to significant skills flight and erosion of private and public financing, thereby negatively affecting quality service delivery and achievement of the United Nations (UN) Millennium Development Goals (MDGs).

The cocktail of measures that were adopted by Government in 2009 resulted in some modicum of economic stabilisation, with Zimbabwe achieving a real GDP growth rate of 5,4% in 2009, 11,4% in 2010, reaching a peak of 11,9% in 2011. However, the recovery remained fragile as growth declined from 11.9% in 2011 to 10,6% in 2012 and 3,4% in 2013.

2,8 Despite the economy having shown some degree of stabilisation, with inflation modestly below 5%, it still experiences a myriad of challenges, which if not addressed, will reverse the marginal gains recorded so far.

The manufacturing sector remains in crisis with capacity utilisation declining from an average of 57% in 2011, 44% in 2012 and 39% in the 3rd quarter of 2013. This is attributable to structural and infrastructural bottlenecks such as erratic power supply, obsolete machinery and dilapidated infrastructure as well as lack of and high cost of capital, hence negatively affecting value addition and beneficiation as well as employment creation.

Fiscal space remains severely constrained due to poor performance of revenue inflows against the background of rising recurrent expenditures and a shrinking tax base. The economy has also been saddled with a high debt overhang with an estimated debt stock of $10 billion as at December 2012 caused by the country’s failure to access international capital and investment inflows as illegal economic sanctions have not been removed.