via RBZ chief instills hope | The Herald August 28, 2014 by Victoria Ruzvidzo
It is not all doom and gloom for Zimbabwe. Indeed the economy is facing immense challenges but these are surmountable.
What is required is discipline and strict adherence to strategies identified as having the greatest effect to turn the economy around.
This is the conclusion one arrives at when they go through the Monetary Policy statement issued by Reserve Bank of Zimbabwe Governor Dr John Mangudya on Monday. It is a document that induces hope and paints a picture that Zimbabwe still has the wherewithal to get the economy back on a sound-footing.
He narrates the challenges and also proffers possible solutions in a document he entitled Back to Basics: Setting the tone for Zimbabwe’s Economic Recovery.
Dr Mangudya assumed office at a time the economy was under siege, with almost everything seeming to have been going the other way. The gains registered since the introduction of the multi-currency system were somewhat dissipating while the confidence gained then was fast being replaced by trepidation.
However, it appears this scenario has not drained energy from the good Governor and his team but has actually energised him if the tone of his monetary policy statement is anything to go by.
He has not disappointed since assuming office a few months ago.
“I feel greatly honoured to have been given the opportunity to serve the country as Governor at this juncture in the history of Zimbabwe. At a time the nation needs to work as a team to confront the challenges facing the economy.
“We are in it together as a nation. We cannot be bystanders. We need to put in place bold and pragmatic measures for the recovery of the economy. This is our motherland where no one else is going do to it for us. We are by ourselves. We are the people whom we have been waiting for.”
I couldn’t agree with him more. Indeed this introduction is his statement says it all. Solutions for this country will come from none other than Zimbabweans themselves. It is our attitude, discipline, energy, commitment and desire for progress that will turn the tide for this economy.
Fiscal and monetary policy statements can be written and read out quite fluently but it takes everyone to act out what is written in these scripts. At the end of the day, finger-pointing will not work but it is the delivery, by Government, the central bank and all of us, that will bring the average 7,3 percent GDP growth envisaged under the Zimbabwe Agenda for Sustainable Socio-Economic Transformation.
Challenges such as poor liquidity, low export receipts, high imports,company closures, growing unemployment, dwindling disposable incomes, non-performing loans etcetera, will soon be a thing of the past if we all operate in one accord.
Dr Mangudya went to great lengths to illustrate that Zimbabwe requires selfless delivery by Zimbabweans to shrug off present challenges.
“We now need to move forward without looking backwards. Whatever made us to be where we are today should now be treated as history. The time to move forward to achieve the goal of economic prosperity is now. It’s doable. We can do it. We must do it. We need to first get back to basics.”
Issues such as respect of the rule of law; policy clarity, consistency, transparency and predictability, nurturing a positive business culture and productive work ethics and culture to take responsibilities as enunciated by Dr Mangudya will turn things for this economy.
Furthermore, a spirited fight against corruption, smuggling and profiteering; and the need to “fight the negative perception that Zimbabweans continue to create, knowingly or unknowingly, for ourselves” is what the doctor ordered for the country to resolve current challenges.
Certainly these are factors that will enable Zimbabwe to return to its former glory and be the big brother in the region that it should, particularly now that our President is now the Sadc chair.
The bulk of the challenges in the economy emanate from suppressed production and Dr Mangudya rightly stated that it is critical to ensure consistent and transparent policies that will jump-start production in industry as we go back to the basics in terms of economics, banking and business.
Presently most manufacturing companies are operating way below their capacity resulting in high imports and conversely, negligible exports. This imbalance is the root cause of the majority of issues constricting the economy.
The MPS noted that one strategy that would work, would be to capacitate those firms that are struggling but are still operational before assisting the reopening of those that have closed.
This would be a quick-win. It is easier to increase production levels in existing firms while it would take much longer to breathe oxygen into those that have closed shop already.
This is a strategy that can increase production in a short space of time if applied diligently.
Furthermore, the central bank pledged to play a central role in raising funds to oil Zimasset. This is as it should be.
Lack of long term funding and suppressed Foreign Direct Investment have combined to produce an illiquid economy.
Already we are made to understand that the apex bank is in discussion with a number of international financiers.
Operationalising ZimAsset does require robust and prudent fiscal and monetary policy measures as stated in the document and Dr Mangudya assured the nation that he will be equal to the task.
We shall certainly hold him to account come year-end and we take stock of the economy’s performance. We would want to believe that the good Governor is able to deliver on his promises.
Of course he was quick to say that concerted efforts would be required to achieve discernible results. He must not feel cushioned by this because we will still do a detailed appraisal on his delivery.
The central bank has also reassured the nation that the multiple currency system will remain in force in the foreseeable future. This is welcome news, particularly for business.
We know there are others like my very good brother Joram Nyathi our group Political Editor who insists the Zimdollar should have been brought back yesterday, with good arguments to support his stand, but I belong to the school of thought that says there is need for production to be stimulated first while foreign currency improve to back the local currency.
It would certainly be disastrous were it to be introduced today. Indeed a nation prides in its own currency but this has to be done systematically, any haphazard introduction would prove fatal for the economy.
Another highlight was the reduction to 5 percent from 30 percent, the total amount of foreign currency that banks are allowed to hold offshore.
This measure will obviously improve liquidity.
Keeping large amounts in foreign jurisdictions was depriving the market of funds while feeding into the foreign economies.
While a number of domestic measures were set out to improve the economy, Zimbabwe will also need to introduce investment policies that will attract more Foreign Direct Investment to augment local efforts.
The fact that this country realised only $67 million in the first six months of the year is untenable. More efforts should be directed towards attracting FDI.
The ZimAsset document also highlights FDI as one avenue through which sustainable growth can be achieved. It makes sad reading to note that between 1980 and 2013 this country managed a total of $1,7 billion against Mozambique which registered $15,8 billion and Zambia which recorded $7,7 billion.
Such statistics demand that we pursue the investment issue more vigorous. By quite some measure, Zimbabwe has much more to offer to investors. We have a highly educated and skilled labour-force and natural resources which should give us quite an advantage over most countries in the region.
This gross anomaly needs to be redressed urgently.
Of course it is easier said than done but the determination to achieve should drive this country to greater heights.
Furthermore, the reduction to $5 000 in terms of funds individuals are permitted to carry with them out of the country will ensure that the bulk of cash available in the market is retained in the system. Zimbabwe has been losing out in this instance and we applaud Dr Mangudya for resolving this.
There is so much more carried in the MPS that would require acres of space in terms of commentary but we support Dr Mangudya’s optimism and his passion to see the economy grow again.
It is everyone’s responsibility to ensure we rid the economy of the gross indiscipline and casual adherence to policies. This will take the economy back to its former glory.
The defeatist attitude of negative talk will not sell.
“The negative perception towards the country by foreigners is mainly emanating from within Zimbabwe. Charity begins at home.
“We need to position ourselves in line with the African proverb that says ‘Until ions start writing down their own stories, the hunters will always be the heroes’. (Simoen Messan Adagba)”, concludes Dr Mangudya.
In God I Trust!