Govt’s 10-point plan a worthless dud

via Govt’s 10-point plan a worthless dud – The Zimbabwe Independent August 28, 2015

THE 10-point plan presented by President Robert Mugabe in his state of the nation address in parliament on Tuesday has been widely dismissed as not worth the paper it is printed on. Analysts say unless substantive reforms are introduced and funds are secured to finance economic recovery, nothing will change any time soon.

Kudzai Kuwaza

The plan, which is mum on how the targets will be achieved or financed, includes revitalising agriculture and the agro-processing value chain, advancing beneficiation and/or value addition to agricultural and mining resource endowment, focusing on infrastructural development particularly in the key energy, water, transport and information communication technology subsectors, and unlocking the potential of small-to-medium enterprises.

Other objectives of the plan include pursuing an anti-corruption thrust — which is hardly new as government has dismally failed to fight graft despite endless rhetoric — and modernising labour laws. Government’s track record of implementing pronounced policies is abysmal; these range from the Economic Structural Adjustment Programme (Esap) of the early 1990s to the Zimbabwe Programme for Economic and Social Transformation (Zimprest, launched in 1998) to the abandoned Medium Term Plan which was scheduled for 2011-2015 and ZimAsset. Economic analysts and stakeholders are sceptical that the 10-point plan will be any different to other failed and abandoned policies. Some say it is an unsound or worthless dud which will not turn around an economy characterised by a debilitating liquidity crunch, lack of cheap funding, low capacity utilisation, obsolete equipment, company closures and job losses, among a host of challenges. Economist John Robertson does not believe the 10-point plan presented by Mugabe is feasible, with current government policies remaining toxic and hostile to investors.

“This is a shallow group of objectives which cannot be called a plan,” Robertson said. “I don’t see any evidence of it being a plan. In the first place there is no admission that it is the government’s bad policies that have got us to where we are. They talk about revitalising agriculture but they do not talk about restoring the rule of law on land, security of tenure, property rights and funding.”

Robertson said the beneficiation and value addition processes which are on the list need substantive investment in productive sectors, but will remain elusive as long as government failed to abandon damaging populist policies. Investors have been staying away from Zimbabwe because of repellent policies such as the Indigenisation Act which compels foreign-owned firms in key sectors of the economy such as mining to cede a majority stake of at least 51% to local persons. Various business delegations from countries such as China, Russia, Australia, France, United States, United Kingdom and Scandinavian countries, among others, have pointed to the country’s poisonous indigenisation laws as a stumbling block to investment.

Amendments to the Act, primarily giving line ministers power to approve indigenisation plans for sectors under their purview, with the Indigenisation ministry only issuing compliance certificates on the recommendations of line ministers after their assessments, have been dismissed as artificial and opening the door to rent-seeking behaviour by government ministers. Failure to respect property rights has also contributed significantly to the dearth of investment.

Actions by the government such as the recent seizure of 23 farms last week will only increase uncertainty among investors, while the recently amended labour laws railroaded by government and signed this week by Mugabe are clear evidence of politics interfering with business, said Robertson, adding the labour law is a case of “government making promises which other people have to keep”.

The amendment of the labour laws was triggered by a July 17 Supreme Court ruling that allowed employers to terminate workers’ contracts on three months’ notice without paying severance packages, resulting in more than 20 000 workers losing their jobs.

University of Zimbabwe economist Fanuel Hazvina said while the 10-point plan sounds feasible, it remains to be seen whether it will be implemented.

“In terms of coming up with plans we are very good but what is lacking is the aspect of implementation,” Hazvina said.

“The issues which are raised (in the plan) might make a lot of sense, but they are not much different from government’s economic blueprint ZimAsset.”

ZimAsset is virtually dead in the water due to non-implementation as it requires more than US$27 billion to implement. Hazvina said without adequate funding the 10-point plan will not see light of day. An economist who spoke on condition of anonymity said the plan did not bring about anything new as what was presented has been discussed on numerous occasions to no avail.

“What the President said is not new. The disconnect is in the body language,” he said.

“The problem is government is not able to toe the line of what it is proposing to do. There is no political will. It is also going to be very difficult to implement the plan without funding. It is a wish-list.”

The revitalisation of agriculture as espoused in the 10-point plan by Mugabe will remain a pipedream if there is no security of tenure, Bulawayo-based economist Eddie Cross said.

“The 10-point plan is just promises, promises, promises,” Cross said. “The undertakings he has made regarding agriculture are really meaningless because there is no recovery possible unless they give security (of tenure).”

On the reform of the labour law, Cross said the adoption and fast-tracking of the Labour Bill is not acceptable to the International Labour Organisation and will threaten labour relations in the long term.

He also noted that Mugabe failed to present a political solution to the crisis bedeviling the country which he said is “at the core of the problem”.

Cross also said the introduction of special economic zones which he called “interesting” could have a positive impact but a holistic package of reforms is critical for economic recovery, not this 10-point plan.