Zimbabwe Economic Forum – Open For Business For Who?
On the 27th of September 2018, the Rosa Luxemburg Stiftung (RLS) in partnership with the Labour Economic and Development Research Institute of Zimbabwe (LEDRIZ) hosted the, “Economic Forum- Towards Pro-Poor, Inclusive and Sustainable Economic Growth and Development in Zimbabwe” at the Meikels Hotel in Harare. The main objectives of the conference was to provide a platform to inform macro-economic policy advocacy for a future Zimbabwe. Furthermore, to provide a space for stakeholder dialogue to develop a common understanding of the key macro-economic policy challenges and opportunities for the attainment of pro-poor, inclusive, and sustainable economic growth and development for Zimbabwe. The event was well attended and participants included policy makers from the Ministry of Finance and Economic Development and The Reserve Bank of Zimbabwe (RBZ), trade unions, civil society organizations and academia.
The LEDRIZ Senior Researcher, Dr. Prosper Chitambara, presented a contextual overview of Zimbabwe’s current macro-economic trend which is characterized by a declining annual GDP growth rate and high debt rates since 2012. In 2018, domestic indebtness is estimated at about USD17 billion and savings ratio is currently at a negative, suggesting that Zimbabwe is a high-consumption economy. Dr. Chitambara then proceeded to question the, “Zimbabwe is open for business,” mantra proposed by the current government, arguing that the current environment is not conducive enough to attract business due to policy instability, foreign currency regulations, access to finance, corruption, restrictive labour regulations, ineffective government bureaucracy, high tax rates, and inadequate availability of infrastructure. Furthermore, Dr. Chitambara also argued that the current economy is also jobless and characterized by an informal economy making up 94% of the domestic market.
Dr. Chitambara critiqued former and current macro-economic policies such as the Zimbabwe Agenda for Sustainable Socio-Economic Transformation (ZIMASETT) 2013 and the Interim Poverty Reduction Strategy Paper (IPRSP) 2016-2018 for lacking sustainability and local ownership due to the lack of participation in policy decision making. As a consequence, the current macro-economic policies lack a pro-poor and inclusive framework that places people at the centre of development.
Moving forward, Dr. Chitambara recommends that Zimbabwe take ownership of its own development destiny and argues that foreign investment in its entirety may not necessarily lead to positive outcomes. He further argues that there is an urgent need to focus more on the informal sector because big foreign businesses will not be able to absorb labour. In addition, Dr. Chitambara argues that big businesses are usually characterized by high mechanization at the expense of labour intensive sectors such as textiles and manufacturing, which Zimbabwe should focus more on. He thus also recommends that more focus must be directed to unlock the productive capacities of the economy such as transport, balancing exports and imports to create more jobs and empowering the local economy to compete with other sectors of the economy.
Furthermore, Dr. Chitambara argues that debt should be used to finance investment in social and physical capital such as health care, food security, social welfare and protection because local investment is exceptionally important to achieve a democratic developmental state. Dr. Chitambara calls for the establishment of a social contract between government, citizens, the private sector and workers to create effective institutions that will realize a democratic developmental welfare state where resources are dedicated to the realization of constitutionally mandated people’s rights by coordinating key partners in the industrial sector and by first unlocking all binding constraints on growth rather than attempting to address all weaknesses at the same time.
The second speaker, Dr. Nicholas Masiyandima, a representative from the Reserve Bank of Zimbabwe (RBZ), presented an overview of Zimbabwe’s monetary policy and financial sector developments. Dr. Masiyandima began the discussion by highlighting the current imbalances that are causing destabilization in the Zimbabwean economy. For example, the high electronic payment system and cash shortages, higher foreign reserves, the rising informal cash economy which is unaccounted for in the economy, monetization of fiscal deficits, rising inflation, low industry capacity speculation, ease of doing business and a confidence deficit, low competitiveness and a low savings rate. Overall, there is consensus between the speakers about the challenges currently facing Zimbabwe. However, the challenge is in finding the solutions to confront these.
Dr. Masiyandima argues that there is an urgent need for fiscal consolidation and that this will require reengagement with the international community. Furthermore, there is also need to obtain access to external finance through offshore borrowing, foreign direct investment and foreign portfolio investment. Moreover, Dr. Masiyandima recommends increasing domestic production through import substitution. And, enacting necessary reforms in parastatal companies.
The presentations were well received by the participants. However, there were several questions that were raised. Of particular relevance was the question of international investors and the popular, “Zimbabwe is open for business” mantra, which currently seems to trump the voices of local and impoverished Zimbabweans by calling for policy that prioritizes foreign direct investment instead of policy that can lead to the formalization and support of the informal economy. The Zimbabwean government facescritique for its lack of meaningful consultation with citizens.The consequence is an exclusionary policy planning processthat leads to the lack of a national vision and hence the continuous possibility of policy failure. A call for a national development plan, Vision 2030, that is divorced from politics was also made.
Ultimately, the event was successful in providing a forum for effective social dialogue between civil society, trade unions and government representatives to develop a common understanding of the current macro-economic policy, challenges and opportunities for the attainment of a pro-poor, inclusive and sustainable economic future for Zimbabwe.