By Lazarus Nyagumbo
Manchester, England. (News of The South) – After two decades of international economy isolation as a result of western economic sanctions at the behest of some misguided and unpatriotic opposition misfits and their misleaders, Zimbabwe deserves better domestic and international economic enablers to navigate through a litany of constraints towards stable, steady and sustainable economic growth.
Generally speaking, economic growth is an increase in national output in an economy overtime or a given period. There are usually two types of economic growth. Firstly, short run economic growth is caused by an increase in productive efficiency in the use of scarce available resources. Productive efficiency simply means a better use of unemployed resources like land, labour and capital including enterprise. In order to achieve productive efficiency, demand-side policies like expansionary fiscal and monetary policies are used. Expansionary fiscal policy (Keynesian stimulus) involves government or local city councils cutting down direct and indirect taxes to boost disposable incomes and spending power in the national economy. Also, government may deliberately increase spending on infrastructure developments such as highways, local roads, schools, hospitals, water supply works, power supply infrastructure (the enablers of economic development). However, such a macroeconomic policy may result in rising national budget deficit, but this can be offset by rising tax collection revenues from increased spending taxes such as more revenues from the 2% electronic transaction tax.
To support expansionary fiscal policy, the central bank must also implement loose monetary policy by increasing money supply, quantitative easing, cut base rates which may influence all other types of borrowing/ lending rates to fall, buying government bonds, currency depreciation, lower reserve ratio among other conventional monetary tools manipulation. Lower interest rates will make the cost of borrowing funds for investment or consumption cheaper, boosting aggregate supply and demand leading to a rise in short run national income, output or expenditure.
Long run economic growth basically implies the expansion in productive capacity of the economy. This requires more supply side policies which will boost aggregate supply in the economy. Some of these policies includes increased funding in education and training to ensure relevant skills that speaks to the needs of the domestic economy are improved. Furthermore, infrastructure development as alluded to above is also paramount in boosting aggregate supply through efficient, reliable and cost-effective production-value-chain operations. In some countries, reducing the power of trade unions to negotiate for higher wages, incite labour supply withdrawals through mercenary stay aways, demonstrations, looting, anarchism and arsonism has been implemented. This is mainly to ensure that business operations are not willy-nilly disturbed and the related opportunity costs are minimised or completely curtailed.
Improvement in modern technology investment and re-tooling is also highly celebrated as a fundamental requirement to reduce the cost of production, increasing productive efficiency and ultimately long run aggregate supply of goods and services. In addition, cutting down welfare or state benefits will also improve incentives to work and when more people are in work, production rises and government spending on welfarism falls, unlocking funds for other pertinent developmental activities. However, supply side policies are effective in the long run and some of them maybe costly to implement. But it must be emphasised that supply side policies will achieve the four main macroeconomic objectives of growth, low inflation, low unemployment and more export forex earnings (health balance of payments).
Now given the foregoing clear analysis of some of the economic enablers that set the foundations for prosperity and rising living standards, how is Zimbabwe fairing in these?
The new dispensation administration must be applauded for setting the scene for future sustainable growth through a diligent implementation of Transitional Stabilisation Program, Statutory Instruments (SI142, SI143, SI144, SI145 among others). The government must carry on with its public enterprises rationalisation some of which were only becoming a breeding ground of corporate mis-governance at the expense of service users or tax payers, it must be stopped. Government must be supported by all progressive citizens in its quest to de-dollarise the economy. We have all seen how the dollarization has been abused and retarded meaningful economic recovery, growth and development since GNU regime. It must be made clear to citizens that whilst dollarization helped to quell the deteriorating macroeconomic situation at the time of its introduction by Acting Finance Minister Chinamasa in January 2009, largely throughout its life-span, dollarization failed to improve the productive capacity of Zimbabwe’s economy.
The main reason was an insatiable appetite for consumptive imports and dead capital imports instead of a deliberate productive real capital imports like machines, equipment, technology to re-tool and improve our industry capacity utilisation to ensure we have adequate supplies of goods and services made in Zimbabwe. There is no way the dollarization regime was sustainable when our economic agents were taking the USD outside of the economy to finance consumption imports, by the way USD doesn’t grow on trees or its not part of manna falling heaven. USD must be earned through sustainable value-added exports like the Chinese economic ideology.
What’s more, the new dispensation administration has shown a commendable willingness to deal with the corruption scourge bedevilling our economy. It must be made clear that corruption is ubiquitous in every country, at every economic level (individuals, firms, councils, associations, cooperatives, opposition parties, NGOs, ministries, international community) and it must be robustly addressed top-down to ensure that no one is left behind in the economic recovery, growth and development. The economy must speak to the needs and wants of as many as possible citizens. We must guard against a scenario where the economy only works for the few oligarchs, overt or covert cartels.
Going forward, Zimbabwe need more production time than toyi toyi. Only more production, production, production will produce goods and services to create more stable sustainable steady growth, employment, low inflation and improved exports output. And everything will just fall into place.
Thatcherism involved cutting down the power of destructive trade unions, activism and to some extent led to strong foundations of a market-based economy. The Chinese have mastered State Capitalism whereby the government deliberately embark on fiscal stimulus anchored on infrastructure development which unlocks a variety of multiplier and accelerator effects on the economy. Curtailing business operations through shutdown or mass stay away is only going to negatively impact business production and all the supply value chains, to whose benefit or loss, to what end? We must deliberately rise above egotistical egocentric egomaniac selfish politics being advanced by some misguided political parties that lost election. The election cycle is usually 5yrs, and if I am not mistaken, the next election is due in 2023. Between now and the next election date, national interests must supersede any political posturing which is inimical to the people’s economic recovery growth and development.
Alternative sound realistic macroeconomic policies must be the focus of any progressive political party that seeks to win the mandate to lead the country to prosperity. Anything else is mere politicking to advance personal ambitions but we all know that no amount of political contestations must override our national interests. Every true patriotic leader must put national interests first, the people’s welfare first, enablers for economic recovery, growth and development first. Now, can someone tell us how the opposition’s continued appetite for begging more sanctions, for organising more violent demonstrations, more stay away is going to help the people of Zimbabwe. We must not tolerate “opposition’s devil’s kiss, they beg for more sanctions, they have been managing most urban city councils since year 2000 and yet they try to absolve themselves from service delivery failures and blame national government”. This is absurd and can only fool the gullible, one of our biggest challenge in Zimbabwe is lack of sound opposition, we currently have a kind of pressure group, terror group in the mould of mdc.
Lazarus Nyagumbo (®️TLN Economics (2019) is an economist based in Zimbabwe and UK.
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