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Zimbabwe Economic Reality

What is the value we create? That is  the issue to the new Zimbabwean economic reality. This question must be asked everyday, in every household and every sector of the economy. We cannot as a nation go forward without that.

By adopting the multi-currency regime in Zimbabwe we effectively removed any ability to improve our competitiveness by manipulating exchange rates. This has been the trick that African economies have been using to essentially "protect" the economy. These policies have, in my opinion, kept our countries only competitive in the primary and extractive industries. This is why when we look at GDP growth in Africa, much of our economy as a continent is dependent on FDIs (Foriegn Direct Investment) and export of raw materials.

I need to note that I am in no way against the tenets of FDI and export of Raw Materials, it must not be in the long term economic policy of a country to focus on that alone. Remember that today's FDI becomes tomorrow's dividend repatriation and today's raw material export becomes tomorrow's finished goods import. What do we learn from this? Our economies are not structurally sustainable. 

We need to look at structural reform. You cannot get much movement on the same from Policymakers in Africa because of the bungled structural adjustment programs led by the world bank in Africa during the 1990s. The programs brought immense pain to the economies while not assisting in improving the economies much. 

How we should look at structural reform in Zimbabwe is to look at the sections where we have natural competitive advantage and enhance productivity their while improving competitive advantage in other areas. For this to happen, we need to look at first solving government hindrances to the economy. Government in all its facets must no longer be a place where mediocrity is accepted but must have excellence in everything they do. To do that there must be civil service reform, corporate reform, Governance reform and finally reform of how we do business.

Whatever plan that is being put in place must not look at outside help coming in so it has to be a plan that looks to ourselves first before we look at any other option.

I know this is rather simplistic way of looking at things. There are political and personal considerations to taking a hard decisions. However, what is the alternative? Do we continue to depend on our neighbors for assistance and sustenance? What if that position changed? Rhodesia never thought South Africa would turn on it in the fight against the majority rule. We are just an election away from the regional reality changing and Zimbabwe being left in the cold. 

So to the leaders running the economy I say this... We have to start dictating the change to our economic reality before it is dictated to us. Think I am wrong? What do you think this multi-currency regime is ... it was dictated to us. We had got to a point where noone accepted the Zimbabwe dollar and went through Hyperinflation. Now we face deflation because we cannot generate enough currency to sustain the economy. well not officially!
      

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