This is How Zimbabwe’s Economy Will Overcome Its Hurdles
by Prof Mthuli Ncube
February 12, 2020
Zimbabwe’s economy will overcome the numerous hurdles which lay before
us on the path towards prosperity. These obstacles are patent, and in
some cases potent. But with hard work, proper planning, and monetary and
fiscal discipline, Zimbabwe will get out of the current economic rut.
Some of these challenges are out of our control. Take Cyclone Idai in
March of last year for example. The extreme weather phenomenon destroyed
lives and livelihoods. This meteorological mess was followed by
another, as drought struck across our lands. Food output has thus been
severely hampered by these outside forces; and we have been left with no
choice but to subsidise, import and rely on help from the international
community to avoid total crisis. While there were some real
achievements in 2019, including a balanced budget for the first time in
living memory, we have a commitment to subsidise where necessary to make
sure our nation is fed.
As we move into 2020, we will continue
to learn from these “unknown unknowns”. We are already investing in
‘climate proofing’ our agriculture, including new irrigation techniques,
and drought resistant crops. We must now double up our efforts with our
international partners – new and old – to protect our agriculture and
food supply.
As we look forward to growing our economy, it is
incumbent upon us to rein in inflation as quickly as possible. This is
crucial for investment. This is vital for job creation. Month on month
inflation is already stabilising, down to approximately 16%. Of course,
annual inflation remains high. We do not hide this, nor was this
unexpected. That is what happens when you liberalise a currency. But
this process of reforms is a long-term necessity for our economy.
We are taking steps to prop up the currency, drip-feeding in cash
injections in a non-inflationary manner. This has involved exchanging
electronic currency for the physical currency. We will also be
introducing higher denomination notes over the course of 2020 to make it
easier for citizens to transact. We know the current environment is
tough. But Zimbabwe’s economy needs tough reforms, not superficial ones.
In the current environment, both wages and purchasing power have taken a
big hit. Government therefore has a responsibility to support consumers
and the private sector as a whole. As part of the currency reform
agenda, we have had inevitable wage compression. This is part of the
liberalisation process. We have responded by propping up the wages of
the civil servants, and we hope the private sector acts in kind.
Dollarisation inertia unfortunately means that retailers are still
pricing in USD and simply translating it to the local currency. This is
squashing the purchasing power of current wages. We are closing that
gap by allowing wages to rise.
In order to finance these moves
and reboot the Zimbabwean economy as a whole, it is crucial to reform
state-owned companies. We have already passed the first hurdle, which
was to decide which ones should be partially privatised, which ones
should be liquidated, and which ones should be departmentalised, and of
course to highlight those which should not be touched. 2020 is now
about implementing and enacting these moves. We will advance the partial
privatisation of the telecom company (Netone) and motor-vehicle
assembly company (Willovale Mazda Motor Industries), capitalise our Silo
Foods Industries, privatise banking assets and more. We want to have a
private sector-led economy in Zimbabwe. And for the private sector to
lead, we must privatise!
Despite all the hurdles and all the
barriers, Zimbabwe in 2019 leapt 15 places in the Global Ease of Doing
Business rankings. As we look to improve this in 2020, privatisation is a
big part of this story.
For the first time in living memory,
Zimbabwe achieved a balanced budget. We have our fiscal and monetary
fate in our own hands. We have a talented, educated and devoted
workforce, ready to get to work. And we have natural resources a-plenty,
ready to drive our economy forward. The Zimbabwean future is,
therefore, an exciting one. With patience and discipline, we will
overcome all the hurdles that lay in our path and build a better future
for all.
Hon. Prof Mthuli Ncube
Zimbabwe Minister of Finance and Economic Development