Monday, 20 October 2014

Zim-Asset will transform Zimbabwe

By Bernard Bwoni

The country has been going through complex political and economic challenges due to a number of factors. The government of Zimbabwe has remained optimistic and has taken positive steps and reforms to stimulate the economy. Following re-election in 2013 the government launched the Zimbabwe Agenda for Socio-Economic Transformation (Zim-Asset) economic blueprint which is a results-based management economic blue-print with the aim of increasing and improving quality of government expenditure, increasing productivity and competitiveness and improving the business environment as a whole. The economic blueprint is anchored on four key clusters aimed at empowering Zimbabweans through economic growth. The four clusters are Food Security and Nutrition, Social Services and Poverty Eradication, Infrastructure and Utilities and Value Addition and Beneficiation. The economic blue-print was launched in October 2013 and will be implemented up to December 2018.

It is now a year into the implementation of the five year economic blueprint and analysis of projected growth targets will be based on the key success factors as identified in the economic blueprint. The initial signs indicate that some clusters are registering some initial successes. The Food Security and Nutrition cluster has started recording initial successes and this is because of a recovering agricultural sector which has seen cereal production reaching levels near enough for national self-sufficiency. One of the key success factor (KSF) of the blue-print is the ‘deliberate implementation of supportive policies in key productive economic sectors as agriculture, mining, manufacturing and tourism’ and in line with this KSF the Presidential Well-Wishers Input Scheme for the 2014/15 season has now been set to cover all food crops.  Agriculture is crucial to the success of Zim-Asset as it aids economic transformation, enhances food security and helps eradicate poverty. Thus it important to note that the agriculture sector has also been revived and this is on the background of the land reform programme in Zimbabwe. It is not only cereal production where quick wins have been gained but cash crops such as tobacco production levels have been nearing the 236 million kilograms mark attained a year before the land reform.

There has been notable quick wins in the two clusters of Food Security & Nutrition and Value Addition & Beneficiation. Another KSF is ‘value addition and beneficiation in productive sectors such as mining, agriculture and manufacturing’ and more recently there has been a lot of emphasis on the value addition and beneficiation. The government has been putting emphasis on value addition in sectors such as mining and agriculture with crucial steps being taken to ensure that mining companies build refineries in areas where they are mining minerals as platinum. This is very important to the success of Zim-Asset as this ensures that the country is not just exporting raw platinum to be refined externally which deprives the country of revenue from platinum group metals that come as by-products of the refined matte. Value addition and beneficiation ensures that precious metals such as diamonds and platinum will be processed domestically. Value addition ensures that jobs stay in the country and not exported together with the raw matte.

Another key success factor of the economic blue-print is the ‘rehabilitation and retooling of the infrastructure’ and in the Infrastructures and Utilities Cluster there have been evidence of actual projects linked to the cluster taking shape. There are a number of power projects that have been commissioned as the Kariba Extension power project and the Gwayi power project both which will address the power shortages that affect the country. There has been evidence of extensive road-works and dualisation of the country's major highways.

The Zimbabwean economic growth has been affected by liquidity challenge and emotions are understandably running high. For the ordinary man and woman on the street the immediate concern is ‘bread and butter issues’ and the argument that is often and always put forward is that ‘blue-prints do not put food on the table’. That in itself is a fair argument but for food to get to the table government has to come up with sound economic policies and hence why the government has launched Zim-Asset.

Two other key success factors are ‘political commitment and leadership and strong collaborative partnerships among government agencies, private sector and other stakeholders’. The economic sanctions have had a significant impact on the Zimbabwe economy and per the above KSF the government has tried re-engaging the IMF and World Bank and the country’s poor credit rating has negatively impacted the ability to access new lines of credit. According to the government ZimAsset is meant as a measure to improve the investment climate and come up with sanction-busting strategies to enable full exploitation and value addition to the country’s abundant natural resources. When broken down to its bare components ZimAsset is a positive strategy that can only be judged following full implementation. The 129 page blue-print sets measurable and achievable sector outcomes and the sector outputs are point specific for every key result area. It addresses key areas which if effectively implemented will see the economy taking off as evidenced in some clusters. The blue-print is pin-pointing the specific areas of the economy which will redress lack of value addition which has always proved a stumbling block in the country’s economic revival. However a strategy without effective implementation will remain but just a strategy and what is needed is commitment and consistency on the part of the government and all Zimbabweans alike. Implementation via a result-based management system with clear organisational visions and goals which are translated into a results framework of outcomes, outputs, strategies and resources if effectively done will yield results.

A result-based management agenda has always proved effective in most organisational settings and incorporating it into a national economic blue-print makes sense. The system aims to focus on actual results as opposed to just activities and outputs. There are clearly defined expected results, regular evaluation and taking timely corrective action. There are countries such as Korea, Australia, Uganda and Malaysia that have implemented result-based management systems with varying levels of success. The four clusters which are Food Security, Poverty Eradication, Infrastructure and Utilities, and Value Addition and Beneficiation which are identified within ZimAsset are critical to the Zimbabwean economic revival. That is all things being equal of course. The system requires an effective senior and middle management structure to ensure vision and focus is cascade down organizational structure. If effectively implemented ZimAsset is Zimbabwe’s own home-grown initiative that can transform the country economically.

The passing of the Sovereign Wealth Fund of Zimbabwe Bill in September 2014 which will see the setting up of the country’s sovereign wealth fund is crucial to Zim-Asset. The Sovereign Fund as per the economic blue-print will ensure that wealth is generated for future generations and safeguard the country’s economy against external macroeconomic shocks. Of course considerations need to be made regards funding options for the blue-print as a whole. There is need for more collaboration with other stakeholders and enhancing the human capital drive.

Thursday, 16 October 2014

Factional or fictional? Towards functional

By Bernard Bwoni

 Zimbabwe is a country that was founded by the sacrifice of heroes and heroines who gallantly fought on the side of justice and triumphed. These are the heroes and heroines who shone in the envelope of the dark cloud of apartheid and racially-motivated hardships. The extraordinary acts of bravery and heroism performed by these honorable men and women during the protracted liberation endear these TRUE cadres with the people.  These are the men and women who have shaped Zimbabwe and will forever have the country at heart. The satisfaction of their sacrifice they derive not from the achieved victory and glory, but in the totally selfless commitment to the people for the greater good of the country. They only serve to remind us of the higher purpose of self and society. No gimmicks and no false pretenses. No mudslinging, no sideway steps into the neoliberal waters. No factions, just functional through to that priceless day on 18th April 1980 when Zimbabwe attained its hard-won independence. Lest we forget amidst the mire and mud. We salute you today and we will continue to salute you our heroes and heroines. We should not just wait for Heroes Day to remember you, but every passing day as we cherish the independence that some take for granted today.

Thursday, 9 October 2014

Zimbabwe: Open for Business

By Bernard Bwoni

Zimbabwe recently signed exclusive and mega economic and investment deals with China and Russia and the economic outlook for the country is not entirely all downhill and catastrophic. The EU and Britain have been warming up to Zimbabwe and seeking to revive previously strained relations with renewed optimism and readiness to support the government's Zim-Asset economic blueprint. Following on from the recent Russian business delegation to Zimbabwe the UK will be sending in an official trade delegation to Zimbabwe. This is a welcome initiative from the British as this will reconnect the two countries by building and rebuilding long-term mutually respectful and mutually beneficial relationships. A transparent United Kingdom is a perfect partner for fast opening Zimbabwean economy and connecting the UK’s established and financial muscle and investment is a requisite part of government’s economic blueprint to ensure and secure the necessary recovery. The Zimbabwean government has remained open to all mutually beneficial economic engagement. African companies, British companies, Chinese companies, Russian companies, EU companies, American companies and all companies from across the globe are encouraged and welcome to take up the vast investment opportunities in Zimbabwe. The Zimbabwean government has thrown wide open the doors for local, regional and international companies to benefit from the massive and wide-ranging investment opportunities in Zimbabwe as set out under the premises of the country’s Zim-Asset economic blueprint.

The tone and mutually respectful presentation and entrance by the incoming British Ambassador to Zimbabwe Ms Catriona Laing is a refreshing and positive sign of thawing relationships and a step towards mutually beneficial engagement and celebration of genuine reopening of top-level ties between the two countries. Ambassador Laing was optimistic and shared the government of Zimbabwe’s vision about the robustness of the Zim-Asset economic blueprint and had this to say ''We want to build on the very good Zim-Asset economic blueprint that has been developed. We are encouraging our investors to come here, there are many companies in the UK wanting to come to Zimbabwe''. The government of Zimbabwe has made it clear that it is open for business to all investors and the call by Ms Laing for British investors to come to Zimbabwe must be lauded. The impending British Trade Delegation to Zimbabwe just like all investment into the country is welcome and the theme of mutually beneficial engagement will continue to prevail. Ms Catriona Laing’s courteous and prudent entry into Zimbabwe deserves nothing short of a warm welcome and hopefully will continue to engage as positively and respectfully as she started.

The Russians recently clinched a £3 billion platinum deal and a number of companies from that country have been exploring the extensive and diverse investment opportunities Zimbabwe has to offer. The planned British trade delegation to Zimbabwe is clear indication that Zimbabwe is indeed open for business and this is not just one-sided business but benefit for the investor and benefit for the country. This is good for those investing in the country and the communities that made up the Zimbabwe whole. Zimbabwe is unique in the sense that the country possesses vast mineral resources, agricultural resources, human resources and a sound infrastructure. All these create limitless opportunities for the growth and development of resource-based industrial ventures. With vast amounts of fertile agricultural land, large varieties of commercially exploitable mineral deposits, a highly educated and skilled workforce the potential for growth has no bounds. The Government of Zimbabwe values foreign direct investment and actively encourages investors to participate in manufacturing, mining and infrastructure development where there are unlimited opportunities and joint ventures with local investors are also encouraged. The visiting British Trade Delegation to Zimbabwe will see for themselves one of the most developed infrastructures in Sub-Saharan Africa comprising road and rail networks, power generation, telecommunications and distribution networks. Although there is an urgent need to restore and modernise plant and equipment to restore capacity Zimbabwe does possess a solid and complex base which just requires an injection of capital and will see the country take off.

EU companies are ready to come into Zimbabwe? To be honest that is GREAT for Zimbabwe, all investment is welcome and the key is that this remains mutually beneficial business relationships that will empower the communities and ensure the country’s path towards economic transformation progresses. Coming back to the refreshing entry into Zimbabwe by the new British Ambassador Ms Laing, the issue of the economic sanctions against Zimbabwe always raises its ugly and illegitimate head and dampens the ‘refreshing’. It is now common to hear some deny the existence of economic sanctions against Zimbabwe yet Ms Laing had this to say ''The EU is going to review the sanctions next year in February based on progress made by Zimbabwe''. The ‘refreshing’ is dampened by the end bit where Ms Laing said ‘based on the progress made by Zimbabwe’ and the reason being Zimbabwe has and continues to make progress in working at empowering her citizens and encouraging business into Zimbabwe. The issue of review of the economic sanctions against Zimbabwe should be based on the illegality of the measures and nothing else. All that being said that Ms Laing’s polished entry into Zimbabwe remains refreshing until further notice. The Government of Zimbabwe and the UK Conservative Government have always had the cordial relationship and unfortunately that was damaged by the Labour Government of Tony Blair and Ms Laing’s entry has the hallmark of the Zimbabwe-Conservative link from yesteryear.

The emphasis by government of Zimbabwe in ensuring that mining and resource-based companies set up refineries throughout areas of mineral resource endowment is progressive and a sure way towards industrialisation as this will add value to the mineral resource and the country gets more returns. Value addition and Beneficiation are critical for the country as a whole and the communities where mining activities take place as it ensures that jobs stay within the communities and the country and not shipped or exported together with the unprocessed resource away from these communities who sit on these minerals and natural resources. Value addition and Beneficiation will benefit both country and individual communities and that is the only sure way towards real economic transformation and industrialisation. No country has industrialised through exporting raw matte and raw everything. Zimbabwe is on the right path towards genuine economic transformation.
The entry of Russian and Chinese large-scale investment into Zimbabwe will spur the country’s economic transformation and the revival of British companies’ interest in Zimbabwe will add value to the existing.

Monday, 29 September 2014

The muddle with 'moderates' in Zimbabwe

By Bernard Bwoni
Politics is a complex case of harnessing the interest of the electorate and conceding that there will always be an element of indifference from some quarters. There are two sides to the political spectrum in Zimbabwe, the ruling party and the opposition and that is also worldwide in most cases. The ruling party is built on a backdrop of a protracted liberation struggle and the conservative principles are entrenched within these defining foundations. The opposition in the country is mostly ‘moderate’ and that is understandable and expected. The opposition politics in Zimbabwe was founded and funded on ‘moderate’ neoliberal principles and they make no secret of where their loyalties lie.  The question to pose is where do moderates fit in within the revolutionary ranks?

Let us start by looking at what moderation is and how it is viewed across the political divide and within intraparty politics in the Zimbabwean context and of course the 'all important international community'. Moderation is often associated with balance, carefulness, impartiality and a yearning for acceptance from the ‘international community’. It is often seen as the alternative to the bellicose revolutionary approach exhibited by those who inspired and liberated this country from the colonial regime. The ‘moderate’ is often seen as the ‘lovely one’, the ‘good neutral’ with the calmness to be able to 'equally' coexist alongside the very same machinations that have destabilised Zimbabwe over the years. They are often seen as the ‘sensible ones’ who are looking to fuse the revolutionary ideology with neoliberal ideas and ideals which to be fair is often the preserve of opposition politics. The reality is that these moderates don’t inspire, have never and will never build a nation. They thrive on empty promises and principles of ‘being better than the rest’ and the constant craving for approval from the ‘international community’. The moderate in Zimbabwean politics is nothing short of a proxy and their much-celebrated ‘open-mindedness’ about ideas and ideals resembling opposition politics is mere excuses to further undermine the genuine ideology that define Zimbabwe. It is the sacrifices of the pioneers of the liberation struggle which inspire and build nations and may the totally altruistic heroism of the greats as Christopher Chatambudza, Simon Chingozha Nyandoro, Chubby Savanhu, Godfrey Manyerenyere, Arthur Maramba, Godwin Dube and David Guzuzu forever shine the light of freedom and liberation on such uninspiring ‘moderates’.

When there is absence of restraint and control on the conduct and behaviour of members of any political grouping then indiscipline roots itself in the mechanics of that polity. The violation of deep-rooted core values, ideals, directives and regulations governing the behaviour of all party members is the indiscipline that comes with it. Any departure from these core values, beliefs, principles, rules and regulations must be dealt with decisively and this must be across the board. The rules and regulations must be followed accordingly and in line with the polity constitution and members who overstep the line as set by the constitution must be directed and redirected so as to bring them under the authority and premises of the constitution of the polity. This will enable all party members to work within their individual and collective remits as set out within that particular constitution. Any party constitution has a very specific purpose, to regulate, to keep all party members in check and under control so that party objectives, goals and ideology are fulfilled. There must be no exceptions; each and every member of any political entity must stick to rules and regulations as set out by the Constitution of that political entity.

The trouble with moderates is their inability to stand for any real principles and by the principles and direction of a particular political entity. That is why there is this tendency to sit on the fence indulging in unsanctioned snuggly associations with agents of the regime change agenda in Zimbabwe in the oblivious pretext of provincial development. There is everything wrong with deviating from the core values, rules and regulations as set out by the constitution that directs any political entity. If the party directive is that Legislators must not accept funding from clandestine elements of the regime change agenda then any departure from such is nothing short of indiscipline, inconsistent and synonymous with fermenting instability.  The political entity is bigger than these self-seeking ‘moderates’ and they must never be allowed to undermine the honourable name of the revolutionary ruling polity. The ‘moderate; is just but an individual and the party is that bigger picture build on the collective strength of the people. The party is way larger than the insignificant ‘moderate’ pieces and all party members are small parts that make up the unit. These errant ‘moderates’ must be reined in and refocused on the party direction and agenda.

Whatever the motive, cosy embraces with agents linked to elements that have pursued and continue to pursue a regime change agenda in Zimbabwe undermines the polity ideology. Zimbabwe’s sovereignty must never be sacrificed for the egocentric wants of some unstable and reckless individuals at the expense of the majority.  The molestation and manipulation of the constitution of the polity by individuals must never be allowed to undermine the honourable name of the revolutionary ruling party and sovereignty of this country which many a great men and women lost their lives to liberate. Each and every individual must be made to account for their own respective responsibilities or recklessness. Each individual is responsible for his or her dirty deeds and must never be allowed to drag the name of the revolutionary party into the mud for own ends. Any attempts to sabotage and undermine the revolution whether deliberate or naively must be thwarted. Trying to divert attention away from the real issue at hand with mudslinging and unrelated counter allegations are just an indication of paltry grasping onto straws. Cool heads are often an embodiment of real power focusing on action instead of words, and having the ability to present maturity and develop loyalty in unique ways. These childish pranks and associated tantrums are just unacceptable in an ideologically rich and composite structure like the revolutionary party.

The reality is that in a revolutionary setting moderates pose a genuine threat to the cause of the country's liberation struggle for economic emancipation and national sovereignty because the moderate ideological dither or complete lack of ideology in fact wittingly or unwittingly cause confusion, their desire to compromise, appease and please often and always betrays the genuine ideals of the liberation struggle and ultimately national trajectory. It seems like the polity finds itself in an unholy and unhealthy union with such ‘moderates’ who secretly despise the revolutionary ideology and clandestinely working to render the revolution impotent and unclothed. Such moderates will not enlighten or inspire but serve only to invite alien intrigue. The country is currently going through a transition from economic enslavement to economic emancipation, a transient period that requires no moderation. From an ideological perspective the only way for ‘moderates’ is on the other side of the spectrum.

Wednesday, 24 September 2014

ZimAsset: not all doom and gloom

By Bernard Bwoni
Being negative is contagious and if not countered with that productive mind-set it spans with no bounds. It is disabling and when it festers the mind is unable to think beyond the paralysing enfold of the here and now. It takes over and permanently replaces positivity with pessimism. Under the gloomy cocoon of negativity, optimism and positivity are relegated to distant memories. Zimbabwe the country and Zimbabweans her people have gone through trying times of a magnitude unimaginable and rightly so the pessimistic eclipse prevails. It is difficult if not impossible sometimes to think past pain and hunger. The freshness of the wounds inflicted by an economic crisis induced by economic sanctions overshadows optimism which is indefinitely tucked away under the misery, the sorrow, the commotion from the growling tummies and the painful outcomes of all combined. It would be insensitive and inhuman to judge those who went through the economic turmoil and casually prescribe positivity and optimism without genuinely acknowledging the devastating individual and collective experiences. The pessimism and negativity is an understandable short term reaction but when it roots itself into a state permanency then paralysis reigns.
The reality is that many in their questionable quest for 'democracy' have wittingly or unwittingly demonised and destabilised their land of birth and some are being encouraged into pointless marches onto the street. The false pessimism unashamedly camouflages the actual positives and prospects silently shaping up Zimbabwe. There are numerous positive developments taking place in Zimbabwe right now but more often than not it is the doom, the gloom and the disastrous that preoccupies the perennial party-poopers. The recently concluded fiscally and ideologically important trip to China by President Mugabe has been dampened and muffled by the constant choruses of doom. The signing of major investment deals between Zimbabwe and Russia including a $3 billion platinum project have all been negated and relegated to the periphery of economic relevance by the usual naysayers.
ZimAsset is anchored on four main clusters of Food Security and Nutrition, Value Addition and Beneficiation, Infrastructures and Utilities, and Social Services and Poverty Eradication. There are some initial signs of notable key indicators that things can potentially improve and a good example is in the Food Security and Nutrition cluster where a recent report indicated that the number of Zimbabweans requiring food aid is set to decline from 2,2 million to 565000 next year owing to a resurgent agricultural sector which has seen maize production going over the 1.4 million metric tonnes which is enough for national self-sufficiency as such imports will be mainly for stockpiling and reserves. There was also another report that this coming season Zimbabwe is also headed for another successful agricultural season with the Presidential Well-Wishers Input Scheme for the 2014/15 season now set to cover all food crops. The agriculture sector has also been on the rebound following the contentious but necessary land reform programme. Tobacco production levels for 2014 are nearing the 236 million kilograms mark attained in the 1999/2000 season, a year before the land reform. Evolution and revolutions sometimes happen silently and the clusters of the economic blueprint have been steadily taking shape and silently taking off.
The two clusters, Food Security & Nutrition and Value Addition & Beneficiation are standing out. Over the past few months there have been a number of notable key indicators that things would potentially turn round the corner. There is also tangible evidence on the ground in the country which point to the Value Addition and Beneficiation cluster take off with a number of critical pro-Value Addition initiatives taking place nationally. The Diamond Processing Centre near Mount Hampden is nearing completion and these are some of the anchors of the revolutionary economic blueprint.  The $3 billion Zimbabwe-Russia Platinum deal is important in that there are within the deal the provisions for the establishment of a refinery once full negotiations are complete. There are already plans and progress underway for another platinum refinery in Zimbabwe. This is a key development in terms of the economic blueprint as currently Zimbabwe is exporting raw platinum matte to be refined in South Africa which short changes the country of revenue from platinum group metals that come as by-products of the refined matte. With value addition precious metals such as diamonds and platinum will be processed and beneficiation will happen in Zimbabwe instead of exporting the raw product where the country loses out significantly.
With the Infrastructures and Utilities Cluster there are equally extensive and tangible initial signs of the intended outcomes of the economic blueprint. President Mugabe recently commissioned the $533 million Kariba Power project which will address the power challenges currently facing the country. The $2.1 billion Gwayi Power Project with potential to generate 600MW is also in the pipeline and preliminary work in progress. Value addition means our employment is not exported together with the raw matte but rather more jobs domestically. There is evidence on the ground of dualisation of the country's major highways with Harare-Bulawayo at an advanced stage, the Harare-Beitbridge, Plumtree-Mutare, the Harare-Mutare road and Airport road have taken shape, other road are taking shape and many others projects.

The stock market in any country is a strong determinant of the economy’s direction with a strong stock market pointing to earning estimates that are on the up and thus indicating that the overall economy is getting ready to grow. Similarly a down market may point to declining firm earnings and major issues with the overall economy. Indices on the Zimbabwe Stock Exchange (ZSE) have continued to increase with market capitalisation also continuing to maintain growth since the beginning of 2014. The mining index has continued with impressive performance from June 2014 to date. The manufacturing index has not performed as impressively as the mining.
The strength of the housing market in Zimbabwe is another important indicator but in the current economic environment in Zimbabwe it needs to be used with caution. It could be that house prices in the country are overpriced but it is a demand and supply issue. The strength of the Zimbabwe housing market lies in the fact that most
The country has remained receptive to positive engagement with all development partners. Although the strength of formal or payroll employment remains weak as an indicator there is an urgent need to harness the strength of the informal sector employment. Zimbabwe has made inroads in information and technology assimilation with a 100% mobile penetration according to the Postal and Telecommunications Regulatory Authority (Potraz). Zimbabwe has in excess of 13.5 million mobile phone subscribers. With a population of 13.4 million people that translate to every individual in the country having access to mobile phone communication.
The country is also ranked top of the literacy rate on the continent and that points to the progressive policies of the government. The European Council on Tourism and Trade (ECTT) recently awarded Zimbabwe the 2014 World Best Tourism Destination describing the country as 'a safe, open and perfect tourist destination'.
The list of positive things happening in Zimbabwe is endless but these always and often gets buried under that veil of negativity. Ideas build nations and ideas do not stem from negative mind sets. We have a great country, we own it and owe it to ourselves to preserve and protect it from the negative onslaught. To be negative about oneself is an inbuilt fear of own potential. Vultures often prey on that fear to permanently stifle that potential and the possibilities. There are no boundaries to the possibilities that Zimbabwe has to offer her citizens and the opportunities are being presented without limits. Now is not the time for the so-called 'moderates' to champion the vultures' cause but to embrace these endless possibilities. The only way for Zimbabwe is up and you cannot help but notice. Now is the time to take a break from the usual doom and gloom and highlight the positives.

Sunday, 14 September 2014

Vicious circle of balancing social responsibility with economic efficiency

By Bernard Bwoni

Minister Chinamasa’s Mid-Term Fiscal Review was on point and in line with infant industry protection. Now that is a responsive government! The Finance Minister is in line with the premises of ZIMASSET and the cluster of value addition. He addresses domestic production by curbing inessential imports into the country. The idea is to stimulate local production through a period of initial infancy industry protection. There is no way around this, any country at this stage of development is going to require this initial period of protection. The decision to suspend importation of all agricultural produce and cancelling all import permits is a socially responsible and economically efficient strategy if domestic producer’s prices remain as competitive as the imports given up to make way for local produce. Competition is good for the economy as it increases efficiency, better service for consumers and lower prices. Protectionism in the initial stages of economic transformation is equally good for the economy as it offers the domestic producer that cushion to establish themselves and be able to learn to compete in the global market. Domestic producers in Zimbabwe have in the past been insincere and less than honest when government had intervened to offer that initial period of protection and promotion. Some domestic producers have deliberately induced a sense of severe shortages to allow them to inflate prices on basic commodities. Thus the call by local farmers for government to establish local production deficits first instead of directly exposing domestic producers to cheap competition is welcome. The government should be looking at importing only those products that local producers are failing to meet local demand and in return local producers need to offer a quality product at prices that do impact on the welfare of the local consumer and a product that remain competitive for export.

As economic theory dictates, all removal of trade barriers is beneficial to the global economy. The argument is that by increasing trade barriers through tariffs, domestic consumer costs increase, foreign exporters’ sales decline and efficiency gains through comparative advantage are hampered. The developed economies often tell the developing countries of the benefits of free markets with illusory promises of wealth and progress if they opened up their markets. Many developing countries took such advice on board only to find that the markets from the very same developed countries tightly closed for them in return. Protectionist policies for the developing countries are essential and need to create a balance between social responsibility and economic savviness. In as much as the developed countries need to be sincere about free trade, local producers in developing countries also need to be sincere and honest in their conduct when barriers are put in place support them. Protectionism must never be used as a way of creating artificial shortages to inflate prices and maximise profits. The priority must be the creation of a nation that is socially responsible and economically efficient. When it comes to trade liberalisation, the developed countries’ policies have their flaws but developing countries have a responsibility to their own citizens to provide products that remain affordable to fill the gap left by the imports foregone.
There nothing unusual about domestic producers and farmers in Zimbabwe clamouring for protection against dumping from foreign producers. The European Union’s Common Agricultural Policy (CAP) protects EU farmers from foreign competition by deterring imports from outside the European Union by levying import tariffs. The EU also protects producers against price drops by buying up and storing surplus crops or exporting them to developing countries at below market prices which exert unequal competition as has been happening to local Zimbabwean farmers. The EU’s free trade agreements force developing countries to open up their markets for European surplus production. Zimbabwean farmers cannot compete with subsidised EU goods, cheap imports from China and South Africa and in effect face risk of being displaced by unfair competition.

A strong agricultural sector is vital for the highly competitive food industry to remain an important part of the Zimbabwean economy and trade. The marginalisation of local farmers is precisely the risk associated with the ongoing dumping of cheap foreign food imports. For Zimbabwe just like other developing countries to be competitive there is an urgent need to significantly reduce the unsustainable import dependency that characterise the market presently. The country has to immediately switch from being a net importer to a net exporter and the government needs to pursue a policy trajectory that fosters domestic agricultural production and limits import dependency. Facts are stubborn and the fact of the matter is there is no country in this world that has transformed its economy to an advanced economy through import dependency. It is stating the obvious that you have to sell more and buy less to make a profit. There is need for a policy shift that allows Zimbabwe to protect itself from lowly priced imports. In the short term society benefits from cheap imports however the long-term effects on the national economy are devastating. However any government has to remain socially responsible to the plight of its citizens when addressing this issue and looking at policy shift.

 It is a delicate situation developing countries find themselves in, how to balance economic efficiency and social benefit. It is a sad situation that Zimbabwean farmers are being forced out of their own local market because of the cheap foreign dumping that the country is faced with. The cheap subsidised import means that local farmers cannot even compete on a level playing field on their own land. The developed countries such as those in the China, EU and the USA dumps cheap food stuffs in poor developing countries with the help of export subsidies which only further undermines the livelihood of farmers in those developing countries.

 Zimbabwe just like other developing countries find herself in a very difficult position with the IMF and World Bank putting pressure on the country to scrap tariffs and subsidies as part of the free trade rules. In contrast, EU farmers are guaranteed a price for their produce at prices almost three times higher than world prices and there are stringent restrictions on foreign imports into the EU backed up by very high tariffs on imports. Export subsidies allow surplus EU produce to be dumped at bargain prices in developing countries. The EU Common Agricultural Policy uses quotas and very high tariffs to effectively block the importation of foreign food stuffs. It is interesting to note that the EU tariffs vary and rise in proportion to how processed the product is. Partially processed products face an average of 20% higher tariffs than raw resources and finished products face almost 50% higher tariffs (FAO, 2013). To put it simply, developing countries can export the sugar cane but not the sugar made from the sugar cane.

Bernard Bwoni on twitter@bernardbwoni/



The par excellence of resettled farmers in Zimbabwe

By Bernard Bwoni

From the usually dark corners and dead ends of midget-sized notions and negativity the now familiar narrative is that the fast track land reform programme has reduced Zimbabwe from the breadbasket to the basket-case of Africa. Here is a malign untruth and disastrous disinformation that continue to be recklessly peddled by the so-called ‘moderates’ in their unworldly desires and designs to pacify and preserve the historically biased land tenure patterns created by the Rhodesian system. The land reform was an unavoidable necessity to redress the unfair land tenure laws drafted by the unrelenting Rhodesian colonial system. As Gregory Elich puts it ‘temporary economic dislocation is an unavoidable by-product of the land reform in Zimbabwe’. If Oscar Pretorius can get away with manslaughter then the resettled black farmers in Zimbabwe have no case to answer for this aggressive basket-case indictment. Under the prevailing microeconomic and macroeconomic conditions the resettled farmers in Zimbabwe have excelled. It is only 14 years since the Fast Track Land Reform Programme (FTLRP) in Zimbabwe and to start proclaiming failure based on conjecture is reckless and dissonant with national mood. How can one blame black farmers for failure to sell maize to the GMB yet acknowledges that the prices being offered domestically made maize production economically not viable? There are some utterances that need to be savoured in the comforts of your own home to avoid misleading the nation and inviting unnecessary ridicule from the clandestine stakeholders who continue to lay low in anticipation of such careless pronouncements on such a contentious matter.

The question to pose is, was the Fast Track Land Reform the cause of the decline in maize production from 2000? Or were these trends already happening prior to the FTLRP or are they an outcome of the programme? A simple compound annual growth rate calculation tells an otherwise different story of maize and tobacco production trends in Zimbabwe pre and post fast track land reform programme. The compound annual growth rate (CAGR) model is the average growth rate over a period of several years. Using compound annual growth rate is useful because over a number of years it is a better indication of trend than a single years’ growth which may be atypically good or bad. The CAGR is the rate at which an investment grows over a period of years taking into account the effect of annual compounding. Thus it is used to measure performance over periods of time and helps describe a long term trend and has the effect of smoothing out period fluctuations. Thus analysing the boon and bane of this agrarian revolution using the CAGR model is relevant.

During the period five years before the FTLRP maize production shows a compound annual growth rate decline of 8.16% and also a decrease of 4.37% during the FTLRP from 2000-2004 and this can be attributed to the droughts of the 1990s and 2002 and 2004/5 respectively, the impact of the economic embargo against Zimbabwe which meant government had limited capacity to provide funding for the new farmers. However the period post the FTLRP from 2005-2010 the compound annual growth rate of maize increased by 4.51% and the trend has continued to show positive growth. Improvement is yield per hectare is an important factor in the increase of production of maize. In Zimbabwe the period five years before the FTLRP showed an 8.74% decline in maize yield, a 5.37% decrease during and interestingly an 8.75% compound annual growth rate the period five years after the FTLRP from 2005-2010. The decline in area planted for maize is attributed to depressed maize prices during that period and newly resettled farmers switching to more lucrative cash crops such as tobacco and cotton. The prices of maize in Zimbabwe increased by 12%, 10% and 4% in 2002, 2003 and 2004 respectively. The factors that affected maize prices during those periods were mainly consumer preferences, drought, and government policy and decreased output. In 2010 the landed price of maize from neighbouring South Africa was US$219/tonne and local farmers in Zimbabwe could only produce at a profit if they sold their maize produce at US$265/tonne. Thus it made sense to import maize than grow owing to the depressed prices. The maize prices have remained less than competitive and many resettled farmers have indicated that growing maize is not economically viable.

It is evident from the comparative analysis that the performance of maize post FTLRP is better in terms of production, yield and area planted. The area under maize cultivation decreased by 3.9% after the FTLRP but both production output and yield increased by 4.51% and 8.75% respectively the period five years after the land reform. The period during the FTLRP from 2000-2004 showed a 1.07% increase in area under maize cultivation but a marked decline in output and yield of 4.37% and 5.37% respectively. The increase in land under maize cultivation following the redistribution of land did not immediately correspond with increased productivity and yield. This can be attributed to a number of factors mainly lack of inputs, inadequate funding from government, and the newly resettled farmers going through an adjustment period on their newly acquired land.

The compound annual growth rate for tobacco on the other hand shows a modest increase of 0.73% from 1994 to 2014 and when aggregated into different time periods from 2003 to 2014 there is a compound annual growth rate increase of 6.7%, from 2004-2014 the compound annual growth rate is 10.4% and from 2006-2014 the compound annual growth rate is 21.5%. It is important to emphasise that with any agrarian revolution there is always going to be a period of decline as all the factors of production interchange and adjust to the new land ownership patterns. Zimbabwe is no exception and the decline witnessed the period after the FTLRP which the so-called ‘moderates are now presenting to the world as the basket-case argument is that adjustment period. Along with the land ownership changes in Zimbabwe there were also changes and variations in land use, crops produced quantities and the neglect of some traditional staple crops which have historically sustained livelihoods. There was a switch from the traditional staple foods to more lucrative cash crops which had a negative impact on food security.

The black resettled farmers in Zimbabwe have not failed anyone. Under the macroeconomic environment they have gone above and beyond. To disparage the resettled farmers is not only criminal but irresponsible.

These compound annual growth rates are calculated using data obtained from the Food and Agricultural Organisation Statistics. The compound annual growth rates for maize and tobacco in Zimbabwe were computed using Excel with production, yield and area data obtained from FAOSTAT.

Thursday, 4 September 2014

Unemployment in Zimbabwe: indeed 90% or 10%?


By Bernard Bwoni

In Zimbabwe the actual unemployment rate is in the region of 10.5% contrary to some sensational figures of 85-90% as carelessly proposed and paraded by some economists. The majority of people in the country are economically active and as long as a person does an hour’s work per day or per week they are employed. This is the criteria used by the International Conference of Labour Statisticians (ICLS) when defining employment. The definition means having done some ‘work’ over the past day or week and anyone who has worked at least one hour over the day or week is in fact employed. This is in no way meant to understate the economic challenges impacting on the majority of the people in the country. However an understanding of the country’s informal sector is relevant to addressing some of the economic challenges which continue to burden the country.

According to the ICLS ‘the concept of informal employment is considered to be relevant not only for developing and transition countries, but also for developed countries, for many of which the concept of the informal sector is of limited relevance’. In the developed world the informal employment is synonymous with self-employment. In the developing world there is formal and informal employment and in the UK they use employed and self-employed and is the same in most industrialised countries. So in the context of labour statisticians’ definition any ‘work’ including those engaged in the production of goods and services are in fact employment. In Zimbabwe the distinction between employed and ‘employed’ is not clear. Only formal employment often makes it to the statistics records whilst informal employment is neglected. But it is partly due to the informal sector that the country is still on its feet in the face of the ‘economic’ sanctions against Zimbabwe. A young man who heads cattle in the rural areas on behalf of a family in Harare and at the end of the month earns $140. Is that young man employed or unemployed? A lady who sells her wares at the market every day and at the end of the week takes home $500 and has been doing that for over 15 years. Is that lady unemployed? A gentleman who is rearing chicken in his back garden earns $2000-$3000 a month from his project. Is that gentleman unemployed? What of the newly resettled farmer who suddenly realised $20000 from the tobacco auction floors? The list is endless and most of the proceeds from these informal set up do not make it in the formal monetary system. This is an untapped tax revenue base that is ready for harnessing.

In Zimbabwe you have people who have not known formal employment some by choice others not for a very long time and engaged in a number of informal work activities. Many have excelled as informal sector workers and employers. These individuals are economically active and ‘gainfully’ employed and if we are to measure ‘gainful’ with property ownership and possessions many have acquired properties, cars and other tangible assets. The issue in Zimbabwe is that most people would only consider themselves as employed if they are in a formal work setting and hence the distorted employment and unemployment statistics. There are many people in the country who work in the informal sector who earn more than those who are formally employed and how can we justify saying such persons are unemployed? This is not to downplay the fact that more people in the informal sector or self-employed might point to some weaknesses in the labour market. However it cannot be ignored that those engaged in the informal sector are indeed economically active.

The unemployment rate measures the number of people actively seeking work or for a job as a percentage of the labour force. The statisticians in their definition treat all those who ‘work’ as employed. There is informal and formal work, informal and formal employment, employed and self-employed depending on where you are. According to the Organisation for Economic Co-operation and Development (OECD) the unemployment rate gives the number of unemployed persons as a percentage of the labour force that is the total number of people employed plus unemployed. The ICLS recognises all economic activity as ‘work’ and thus include people engaged in activities such as farming whether commercial or communal and all those who work in the informal sector. According to the Zimbabwe National Statistical Agency 50 percent of the country’s population was employed in the agricultural sector, 42 percent were classified as communal farmers or communal farm workers and the rest of the employed figure was 58 percent. From the data on activity for Zimbabwe from the 2012 population census the economically active population was 67%, the unemployed population was 11% and the figure for those employed was 89%.

In Canada 2.67 million people are self-employed which represents around 15.4% of all employed workers in the country’s economy. In the UK 4.5 million are self-employed which accounts to more than 15% of the entire country’s labour force. In the USA 15.3 million are self-employed, both incorporated and unincorporated and that is 1 in 9 people are self-employed. In many countries throughout the world self-employed figures are incorporated into national statistics. In South Africa 10% of the workforce is self-employed that is a figure of 1.3 million self-employed. In Zimbabwe around 60% of the country’s economy is informal and hence why you often hear of the staggering figures of 80% or 90% unemployment. That is because it does not factor in the self-employed statistics and the informal economy of the country.

The national unemployment and GDP figures in Zimbabwe do not reflect the highly informalised economy in the country. Once the country starts formalising the informal sector and start incorporating the figures into GDP and employment statistics this will reveal a solid economy on a sound backdrop of an economically empowered indigenous majority. The trickledown effect of an economy propped up by indigenous stakeholders is that they have a higher propensity to invest back into the country unlike erstwhile minority investors and multinationals who abandoned Zimbabwe in her most time of need following the necessary and highly successful land reform.
It is imperative that formal studies are carried out to gauge the actual size of the Zimbabwe informal economy and GDP in nominal terms. If you look at trade in the country it happens mostly informally at flea-markets, market traders, in homes, flourishing greenhouses, the chicken rearing in the back gardens, fish-farming in the backyards you name it and these are the figures that are not reflected in the national GDP and national economy. The country currently has a negative trade balance as a whole with more imports than exports as Minister Chinamasa recently lamented. But a closer look would reveal that informally the exports that are happening on a cash basis are also not reflected in national trade figures. All that money is not filtering into the formal banking systems and hence the distorted trade balance figures.
The solution is to carry out that study to find out the exact figures of the informal economy, getting the self-employed to incorporate their activities, registration and means of follow up and action plans. A huge task and ask but it is something that needs to be done. Incorporating the informal sector figures Zimbabwe’s GDP would more than double. This is not to suggest that this is the panacea to all the country’s economic challenges but the informal sector is a major source of revenue that the country is missing out on. The big question is how much is the informal economy worth in Zimbabwe? If we are saying over 60% of the economy is informal, a tax revenue base not realised by government what would be the country’s GDP if the revenue from the informal sector is harnessed? As always these are merely questions being posed and not meant in any way to undermine and antagonise.

Monday, 25 August 2014

Case of the Visionary Zimbabwe Look East Policy

By Bernard Bwoni

China owns US$1.317 trillion of the US Government’s Treasury bonds and you never hear anyone commenting that China is colonising the USA? In the case of Zimbabwe you often hear sensational headlines as ‘Zimbabwe Government ‘sells out’ to China or ‘Zimbabwe mortgaging Zimbabwe’s future to China’. His Excellency President Mugabe is currently in China to negotiate a package to fund the country’s ZIMASSET blue-print and other infrastructural development projects. Just as with the relationship between China and the US, President Mugabe’s trip is purely a business and the key is mutually beneficial engagement. The country is negotiating for a US$4 billion rescue package to steady the economy and start implementing major infrastructure developments. The Build-Operate-Transfer (BOT) Project Delivery System is a way to finance big projects especially infrastructure projects through public-private partnerships where China will receive a concession from the government to construct big infrastructure development projects in Zimbabwe. This enables China to recover her billions of investment in the project and at the end of the concession period the end project provides that the infrastructure belongs to Zimbabwe and China has her investment back. China will implement the infrastructure projects in the ‘Build’ phase, will get its investment during the agreed period of ‘Operate’ and at the end of the ‘Operate’ phase the project will ‘Transfer’ to the Government of Zimbabwe. This is a mutually beneficial agreement where Zimbabwe will acquire power plants, major highways, huge solar projects, railways, airports, water supply facilities and China will also benefit from her investment and recover the costs of funding the projects. The Chinese will fund new and existing capital projects under the BOT basis and this will ensure that the country pays for the projects over a long period. This allows for tangible development and the tax burden will not fall on the already struggling people of Zimbabwe. Some sceptics have expressed concern that the country is planning to sideline the State Procurement Board and award government infrastructure projects to Chinese state companies without going to tender. But these are government to government initiatives to fund national projects there is no need for them to go through tender. There are many countries world over using or have used BOT initiatives to fund huge infrastructure projects and these include the Saudis with their oil, Abu Dhabi, Taiwan, Malaysia, Thailand and the Channel Tunnel was constructed on the backdrop of a BOT with a 60 year concession period. So when you hear such statements as President Mugabe has gone to China to mortgage the country and that this is a ‘so-called new form of colonialism’ but the point remains that it is just a BOT, purely a commercial deal that is not only unique to Zimbabwe. China’s engagement with Africa has in fact resulted in real and concrete productive assets such as infrastructural development and that engagement with the Chinese is about productivity, economic transformation and real development and not soft surface issues such as a proliferation of NGOs which foster more of dependence as opposed to innovation and self-sustenance. The engagement with China is seems genuinely based on mutual respect and mutually beneficial outcomes. There is concrete, visible and tangible evidence of the roads and other infrastructure that China is building in Africa whereas engagement with traditional development ‘partners’ continues to witness conflict after conflict in any area of resource-abundance.

All eyes seem to be looking to the East side of the continent and final destination China. The vision of one extraordinary African, HE President Mugabe was to look east when all other avenues were locked shut by the country’s traditional engagement partners who always seem to prosper at the misery and suffering of others. Now this vision is equally shared by the same traditional engagement partners and as President Mugabe begins his weeklong visit to China at the invitation of Mr Xi Jinping we explore how this look east is not ‘a new form of colonisation of Africa by China’ as some in Zimbabwe and in the western media have made us to believe. It is only just over six months ago that the British Prime Minister Mr Cameron, British Chancellor of the Exchequer Mr Osborne and Mayor of London Boris Johnson all led individual high powered business and trade delegations to China. That went to pass without anyone proclaiming that Britain was being colonised by China. It is what it is, purely a business deal. The US and Europe have been tripping over each other seeking economic lifelines from the same Chinese they claim are on a ‘new form of colonising Africa’. It was an honour watching our President being welcomed with such honour from our honourable friends from China. He was welcomed with a full honour guard outside the Great Hall of the People where he received a 21-gun salute. That is the nature of the relationship with our engagement partners from the east, mutual respect. You compare that with our traditional engagement partners who put conditionality after conditionality to the engagement and that was evidenced in the recent EU-Africa Summit and US-Africa Summit. The public ridicule to a Head of State and all the spanners in the works are an indication of engagement that is not based on mutual respect. Zimbabwe is going to triumph and that is thanks to the vision from the country’s look east policy.


Saturday, 23 August 2014

Achilles heel of Zimbabwe politics

By Bernard Bwoni
The Achilles heel of Zimbabwe politics is the lack of an authentic, relevant and effective opposition. Instead of a policy-orientated response to the current economic challenges facing the country, what we get from the likes of Job Sikhala is the ‘overthrow’ of a democratically elected government in Zimbabwe. In any other part of the world, calling for the ‘overthrow’ of a democratically elected government is at best criminal and at worst treasonous. It would be a different matter if one focuses on adjusting their barebones policies and hope for an electoral victory against the ruling party. But calling for the overthrow of government is not only sloppy and political immaturity. As if that was not enough Tsvangirai came up with his own hastily prepared statement saying "We are drawing a line in the sand and we shall pressurise and mobilise the people….we are going to mobilise. The form and content is left to the MDC to plan and execute," Both Tsvangirai and Sikhala are not putting on the table the alternative policy strategies to any of the reasons they are proposing these calls for the ‘overthrow’ of an elected government and calls for mass action. Now the question to pose to Tsvangirai is where are your shadow policies to the country’s economic challenges? A sober opposition acts as trouble-shooters and not mere meddling spectators or rubble-rousers. He went on to say "Let Mugabe be warned that if we cannot live as free men and women in our country of birth, we will rather die as free people," This is a contradictory statement from these two men who are calling for the ‘overthrow’ of a government freely and yet they make confused and confusing claims that their freedoms are being violated. Tsvangirai and Sikhala are being very dishonest and irresponsible with their calls for these mass demonstrations which have the potential of leading to violence. These two men need reminding that such calls for such unconstitutional means of removing an elected government will not address the economic challenges facing the country. Calling for any action with the potential to lead to chaos and unnecessarily endangering lives is irresponsible leadership, an illness of those with misguided and misplaced loyalties to push champion the interests and agendas of a power-hungry opposition which fronts the agendas of even more powerful external stakeholders. There is no painless side to violence, there is no excuse for acts of violence; there is no better or worse violence and all perpetrators walk the same line in the eyes of the recipients of the vile acts. Violence in politics must never be condoned or downplayed as there are innocent victims and misguided perpetrators. A genuine opposition should be busy challenging the ruling party on matters of policy and not trying to instigate unrest in the country. How is a walk in the streets going to address the country’s economic challenges? The call from these two bares no attempt at restructuring the economy but to cause disruption to the country and potentially harm to others.
It is the resilient Zimbabwean spirit that has sustained this country through this very difficult period and not the ill-advised calls for violence or mass action from an irresponsible opposition. It is this beautiful Zimbabwean spirit that is going to address the country’s economic difficulties and not the thoughtless calls from opposition leaders who are seeking relevance through reckless means. Zimbabweans are one and together are going to pull through. The admission is that the country is facing economic challenges but is the opposition engineered violence the solution the challenges?
The country deserves a genuine opposition built on genuine and deep-rooted values. Any citizen would welcome a strong opposition to the ruling party, an opposition that can carry forward the country’s vision and direction and not parade it carelessly to the highest bidder for political celebrity status. An opposition that can define and direct the country’s vision forwards as opposed to na├»ve fascination with aiding and abetting structures and systems which will never empower the people of Zimbabwe. An opposition that engross itself in calling for the ‘overthrow’ of an elected government is structurally and strategically flawed. A people-centred opposition must go beyond empty proclamations and crafty schemes to cause unrest as an alternative and backdoor to the corridors of power in Zimbabwe. Surely if a mere substance-free call for the ‘overthrow’ of President Mugabe is all it takes to tread the corridors of Zimbabwean power then State House would be heaving with Presidents of all colours and creeds right now.
The fact of the matter is that Zimbabwe is not going to have that sort of opposition in the foreseeable future. It takes time and commitment to crotchet the principles, the vision and values that define a country. It takes time and a genuine desire to build a party which embodies, defines, anchors, binds and shapes the nation as a whole. It takes more than following neo-packaged orders from ashore to build a party which offers something tangible to benefit present and pass onto future generations. Any citizen would want an opposition that offers the country reassurances rather than seek to disrupt lives again. These ill-thought out calls from the opposition have not been associated with better outcomes and fortunes where such actions have been encouraged, again by external players with own vested interests. You look at Libya and Egypt today and it is not only disappointing but distressing to watch. The reckless calls for violence and these mass demonstrations will not address our current challenges. The calls from the opposition are careless and ill-advised. The opposition in Zimbabwe does not offer any reassurances that national direction will remain unaltered, the defining foundations of Zimbabwe will remain entrenched and that the nucleus of this country’s vision will remain guarded should they enter into power by some miracle. Zimbabwean opposition politics is in an ideological grey area and vacant space, exist­ing but non-existent, totally unconvincing; bend over backwards and forwards to the whims and commands of stakeholders with agendas that will never in a million years upgrade the lives of the people of Zimbabwe. The people of Zimbabwe only want solutions, not social gatherings to massage Tsvangirai’s politically and personally wounded ego.