Editorial Comment: Stimulus package will balance, recover economy 

Source: Editorial Comment: Stimulus package will balance, recover economy | The Herald

Editorial Comment: Stimulus package will balance, recover economy

Globalisation has created, and will continue to create, a great deal of wealth and a return to having every country totally self-sufficient, would condemn most people on this planet to poverty.

But that does not mean globalisation is a panacea.

The theory requires people everywhere to do what they do best to gain exports and then use that money to buy what they cannot produce for themselves or what they can only produce at far higher costs than others.

What it is not is an excuse to stop producing what you can produce, and some degree of self-sufficiency in at least basic production is an excellent insurance against failure in other parts of the world or against emergencies, like the present Covid-19 pandemic.

This is one reason why Europeans are willing to eat more expensive food, to ensure that their farmers are kept on the land and produce much of what their countrymen eat. The hunger of the Second World War ensured that this would be the case for decades.

Zimbabwe relies on tobacco, gold and platinum metals for the bulk of its exports, but spends far too much of those earnings on food grains, oilseeds and petroleum fuels. There is a lot of other stuff which we could be buying instead, allowing us to produce more and creating more value to drive our economy forward.

And relying on a limited number of exports is not a good idea, if there is a sudden dislocation like Covid-19. Oil producers have just found this out as travel restrictions and lockdowns across the world slash demand for petroleum products and so crash the prices.

The global tourism industry is in a sorry state, as travel restrictions keep people at home and lockdowns mean that even if you can move, most people need to spend their money on things like food rather than luxuries, like a trip to Victoria Falls.

Many emerging countries such as Zimbabwe rely on thriving world trade to stimulate their economies, by exporting commodities and intermediate inputs to global supply chains. This is the sustainable and sure ways for these countries to earn foreign currency without strings attached to it.

As a result, slowing world trade creates headwinds for many of these countries leaving their economies vulnerable when the global economy is not performing as it is now.

Only countries that are closer to self-sufficiency are in a better position to withstand the heat while those that depend on imports of basics will face the full wrath of the impact.

The country is failing to build its own currency reserves because of its huge appetite for imports even for products that it should be producing locally such as wheat, soya bean, maize, tissues, artificial hair — the list is endless.

There are sad scenarios of individuals that are importing even bricks, commodities that are produced locally using 100 percent local materials.

If Zimbabwe had little usable land, or if we figured out how we could grow really expensive export crops, like 10 times as much tobacco, then food imports would make sense.

But we have a lot of unused land and lot of under-used land. So we get the worst of both worlds, no extra exports and having to import basics like food, year in and year out.

There is thus need to prioritise local production, to create wealth and cushion the country from global shocks that we presume are going to be with us for some years to come.

Zimbabwe is endowed with almost everything that a country might need for survival and just need to formulate policies that encourage local production and beneficiation of resources for export.

Poor practices, which depress productivity, should not be tolerated and it is incumbent on both individuals and institutions to use this opportunity to find the right balance between importing and local production.

The Government, in its stimulus package following the devastating impact of Covid-19, has allocated over a third of the $18 billion total package to the agriculture sector, and more than half the funds for the productive sectors.

At least $6,1 billion has been allocated to agriculture, our largest source of income and an area where speedy results are possible.

The country should be in a solid position to produce own maize, soya bean, milk, wheat and other key agro-products.

Wheat needs irrigation in winter, the rest need irrigation at least on standby for dry spells and to cope with the increasing likelihood of an irregular rainy season, either too little rain or the rain falling heavily in brief spells, filling dams, but not much else, and then failing to fall when needed.

This needs capital investment, and a good chunk of the stimulus package is there for irrigation, solving a long-term problem at source.

Government should also be commended for making provisions that allow the manufacturing sector to access at least $3 billion.

The manufacturing sector speaks to both value addition and local production, necessary when our farmers are finally allowed to produce enough and necessary for us to take our place as an efficient producer that can add new goods to the global economy.

During the lockdown period imposed by all our neighbours, we want to start seeing our shops stocking more local products.

To the private sector, this is the golden opportunity for them to grab the market that has been taken away by foreign companies that have been using their huge advantages of economies of scale and cheap capital among other things to suffocate local firms.

Those companies that continue to sit on their laurels will have no one to blame when lockdowns are lifted because foreigners will flood their cheap products again on the local market.

The $18 billion comes in handy because all benefiting companies should take the responsibility to develop Zimbabwe’s economy and should not let Government down by abusing the money to pay extra dividends, buy managers cars and to sponsor other perquisites.