Structural reforms  crucial for turnaround

Source: Structural reforms  crucial for turnaround | Daily News

ZIMBABWE’s economy has for long been dogged by multiple man-created obstacles, confining it in the abyss it has been struggling to get out of for decades.

Once these obstacles are removed economic growth is realised through liberalising labour as well as product and service markets, developments that spur job creation and productivity.
Currently, unemployment is over 80 percent although government’s official statistics put it at much lower than that.

The new dispensation led by President Emmerson Mnangagwa has claimed “Zimbabwe is open for business” but the fundamental conditions on the ground have not changed much from the repulsive ones that obtained during the reign of his predecessor — former president Robert Mugabe.

The ease of doing business, we are told has improved significantly but more needs to be done to attract foreign direct investment.

Besides, corruption has cost the economy dearly over the years and has almost become institutionalised.
So many cases that have been put into the public domain still have not found closure, denting the verve that Mnangagwa’s anti-graft crusade seemed to reflect when he took over the reins from Mugabe.

Finance minister Mthuli Ncube last year introduced austerity measures that were expected to, among other things, cut government expenditure.

However, on the one hand, the austerity seems not to be shared as the elites seems to be living large while ordinary citizens continue to survive on the periphery of economic activity, enduring abject poverty.
On the other hand, efforts to generate revenue for government through, for instance the two percent transactional tax, have increased the appetite to spend for government, whose penchant for profligacy is well-documented.

The country is rich in mineral wealth with diamonds, gold and platinum among the top earners in that sector.
However, some of the mineral produce finds its way out through the country’s porous borders as producers try to earn the elusive United States dollar.

Tobacco farmers recently withdrew their crop from the auction floors following disagreements over payment methods. Golden leaf farmers expected payment for their crop in US dollars, a currency that would ensure they would preserve value.

This would allow them to pay for inputs for forthcoming seasons as well as pay their employees back at the farms.
If the farmers are not incentivised, chances are they may not be able to produce next season, dealing a deadly blow to one of the country’s chief foreign currency earners.