By Lazarus Nyagumbo.

Lazarus Nyagumbo (TLN Economics) is an economist currently based in U.K.

Manchester, United Kingdom. (News of The South) – Productive efficiency is concerned with the efficient optimal method of producing goods; producing goods at the lowest cost.

Allocative efficiency is concerned with the optimal distribution of goods and services.

For example, economic activity could be productively efficient in producing large numbers of boots, but if they were all for the left foot, it would be allocatively inefficient as no one would benefit from these low production costs.

Protecting The Domestic Niche Markets

The ZW economy has experienced huge scarce forex leakages, outflows due to high marginal propensity to import cars from Germany Japan, SA, U.K., USA at the expense of real productive capacity investment in equipment, factories, machinery, Infrastructure etc. It is interesting to note that Zimbabwe has a luxury of having a multiplicity, types of car models, Bango, pombi, from top of the range Benz 4matic, Range Rover, BMW, Nissan, Toyota, Dodge, Audi, Mitsubuish, Volvo, Mazda etc, crowding out potential niche market of local auto production. Indeed, sanctions since 2001 played an excruciating painful role in adversely corroding and eroding the local industry competitiveness. Sanctions stifled necessary efficient technology transfers enjoyed in a free trade environment. This had a negative multiplier and accelerator knock on effect on macroeconomic objectives of sustainable growth, low unemployment, low inflation and a favourable BOP.

Elsewhere, in economies like South Korea unconstrained with economic restrictive sanctions measures, the domestic market was monopolised by their Hyundai and Daewoo automobile brands, which later provided a springboard for economics of globalisation, Hyundai exports all over the world as of today.

Such industrialisation strategy is important in developing and strengthening domestic niche markets that can be regularly and continuously serviced by local manufacturers. This is a classic example of home-grown economic growth and development with great positive national macroeconomic outcomes. Zimbabwe doesn’t not benefit through sanctions isolation and a variety of car brands servicing domestic economy. Zimbabwe is actually exporting jobs away by providing market demand for foreign goods and services.

Free Markets & Freedom

Classical and neo-classical economists advocates for free market economy, where individual choices through the invisible hand are celebrated in solving the three basic economic question: what, how and for whom to produce in attempting to solve the economic problem of scarcity. Anyone who suggest to limit consumer free market choices will be seen as violating human rights, really ? However, propagation of such consumer human rights, freedom of choice, usually emanate from a parochial view that fails to recognise the economy as a National Circular Flow of Income & Wealth System characterised with injections (investment, exports, govt spending) and leakages (savings, imports, taxation) as espoused by J M Keynes (1936).


For any economy to enjoy sustainable growth, low unemployment, low inflation and sound BOP, economists agree that injections must be greater than leakages. In Zimbabwe’s scenario, imports of luxury consumptive goods and services have seen the economy bleeding profusely scarce forex worsening the intended sanctions effects. It is imperative therefore that the national economic system operate like all natural systems with a nerve centre, heart/engine/head that makes national choices in the greater common good and interests of all the organs of the body. Luxury Import Restrictive Measure is one among a lot of ways to achieve such a well functioning economic system.

Free market insatiable consumer wants or so called rights must never take precedence over rational national macroeconomic interests and proven natural scientific principles.

Chinese Economic Model

A compelling example is the Chinese Economic Modelling that diligently, robustly and resolutely pursued national economic interests truthfully over the so called free market luxury consumer rights, saving a lot of forex in the process. As of today, China is one of the few countries enjoying a trade surplus, high forex reserves to the extent of lending over US$1.2trillion to USA.

More and more Chinese enjoy a better living standards today as result of economic sacrifices they undertook to restrict luxury consumptive imports during the time of their economic revolution. Zimbabwe must be willing to take the pain of foregoing luxury consumptive imports today in order for future generations to enjoy a better tomorrow.

Visionary Leadership

A visionary leadership both in private sector, third sector, govt and opposition parties must have the courage and stamina to make right necessary unpopular economic decisions for betterment of the populace in the medium to long term. No pain, no gain. Populist views, populist policies are tempting to undertake by all stakeholders, but behold, the economy is very fair, it will penalise or vindicate decision makers and players involved. It is better to be vindicated in the future than to bask in temporary glory of populist but unfruitful and economically imprudent decisions in allocating scarce factors of production (land, capital, labour, enterprise, markets).

Rational Choice, Not Sanctions

In order to move the economy forward, all economic agents (individuals, households, firms, govt, NGOs, opposition parties, foreign markets) must be guided by national common good and interests including comprehensive rationality in pursuing their economic or political decisions than demagoguery selfish expediency as shown by the continued opposition parties advocacy of restrictive sanctions.

Question to think about?

One question to ponder about is should national Zimbabwe economy continue to suffer due sanctions, free markets luxury consumptive imports (consumerism) choices? What can Leadership across the national spectrum do to ensure and enhance positive economic prospects and outlook? What should the electorate do with selfish leadership campaigning for more economic sanctions? Unless leaders in all facets of our socio-eco- political spheres are prepared to make real wise choices for the national economy (not sanctions), The People’s Welfare may take a longer time to be significantly improved.

It is a paradox to use cotton in a situation that requires a hammer or to use a hammer to kill an ant?

Zimbabwe deserves a better opposition, and an urgent need of economic engineering and reorientation towards sustainable peace, unity, growth and development.

To be continued……

Lazarus Nyagumbo (TLN Economics) is an economist currently based in U.K.




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