New economic order needs actions to back words

29 Dec, 2017 - 00:12 0 Views

eBusiness Weekly

We are about to start a new year, and if we want to look forward rather than back we need to ensure we build on what we know to be the right foundations and move along the road we know is the right road.

The new Government that took office in November has been perfectly clear about wanting to change the economy and establish a new economic order. And it has gone into a lot of detail about how it will do this.

We have the 2018 national budget, where Finance and Economic Planning Minister Patrick Chinamasa was very open about the problems, listed the opportunities, and explained carefully what had to be done to ameliorate the problems and grab the rewards of the opportunities. This is not the first time, mind you, he has done this. But for the last few years it was obvious that his Budgets were not taken seriously by most of his colleagues nor by the former President.

Zimbabwe has been through this fiscal slackness before. First we over-borrowed to spend, spend, spend. When our credit ran dry we printed money, to spend, spend, spend. Climbing out of that collapse we then started borrowing again and in the last year took this short-term unsustainable borrowing to new heights, so that we could spend, spend, spend. And some of course, which the events of November highlighted, were grabbing and grabbing. Financial sanctions put the boot in but we were heading for the rocks anyway.

The one big difference this time round is that the present President, new in office but possibly the most experienced politician around, is making the right noises and is making it clear that he expects the Government to actually implement the Government’s economic plan, which is basically what the budget is. Finance Ministers can never be the most popular figure at a Cabinet meeting, just like finance managers in the private sector are never a wow at meetings with fellow managers, with their eternal questions when anyone has a bright idea about how much it will cost, where is the money coming from and what is the return.

But everyone with any sense knows that getting the finances right means you can then do all the other stuff that you really want to do. And that in turn means that the person at the top, the President for the Government or the CEO for a company, has to back his finance captain and insist that everyone follows the rules and the budgets.

Agriculture has been taken very seriously. The Presidential Inputs and Command Agriculture programmes worked well last season, at least in getting production way up. And they have been reinforced this season with gaps, such as soya production and now livestock schemes, being filled.

With ever-more optimistic weather forecasts from the region’s climate scientists, it makes excellent sense to continue. Getting farmers into full production cuts imports, increases exports and can move half the population of Zimbabwe out of poverty. That triple benefit, with little lead time, is an obvious policy.

But these programmes require organisation, discipline and a willingness to accept that there will be some casualties; this is probably why there was military input last season and why a retired air chief marshal, who has lived that military culture all his adult life, was a rational choice for the job of running the Agriculture Ministry. The major problem with some previous schemes that looked good on paper but did not work in practice was that there was inadequate organisation and very little discipline. Inputs never arrived as expected and far too many who received them either stacked them up in sheds, sold them for whatever they could get, or else actually grew crops but then sold these to others and pocketed the cash, never paying their debts. Slackness and stories of corruption at GMB depots did not help. We now need to weed out the wasters and, to be blunt, the thieves; these are the casualties we can expect. Command Agriculture has addressed some of these problems and this season needs to sort out the rest.

In the end the special schemes we have introduced need to be formalised and largely funded through revolving credit. In other words the new money the Government finds each year for farming has to be added to an ever-larger pool so we move forward smoothly.

This can be done, as tobacco farming has shown. Here there are no Government schemes, just light oversight to keep everyone honest, and no Government money. But after a difficult interim period the tobacco merchants embraced land reform and managed the transition superbly, from dealing with around 2 000 growers on large plantations bankrolled by the banks to tens of thousands of family farms relying on contracts involving inputs and delivery to a merchant. All merchants have now built up lists of farmers they can trust with their money, in the form of inputs, to produce and deliver. Those lists must be among their major assets.

Perhaps the next stage is some sort of data bank in the middle of next year, listing those farmers who have benefited from Command Agriculture for the past two seasons, have worked hard and successfully, followed the rules and whose word can now be considered their bond.

Even if bankable 99-year leases become common soon, most bankers would still rather deal with someone they can trust to produce over some idle wannabe flashing a lease who they might have to bankrupt. And a farmer with a good Command Agriculture record would thus be a valuable customer.

As President Mnangagwa has stressed, the Government has to deliver, that is turn paper plans into reality. This also requires Zimbabweans to deliver. We all deserve a chance, and Government has to help open these opportunities, but we then have to turn that chance into reality through hard work.

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