President’s administration faces litmus test

15 Dec, 2017 - 09:12 0 Views
President’s administration faces litmus test President Mnangagwa

eBusiness Weekly

Hebert Zharare
Presiden Dambudzo Mnangagwa’s administration faces a litmus test.  Policy inconsistency in Government has had serious ramifications on the economy and the socio-economic well- being of Zimbabweans in general.

The investors have either adopted a wait and see approach to business or just take a bold stance and hold on to their capital. Indeed, capital is a coward — it is the first to run away whenever there are threats of disturbances or potentially volatile situations in a country.

Zimbabwe has suffered serious economic consequences as a result of clashes between or among ministers over policy implementation.

The most damaging one is the clash between Finance and Economic Planning Minister Patrick Chinamasa and former Youth, Indigenisation and Economic Empowerment Minister Patrick Zhuwao over the implementation of Indigenisation and Economic Empowerment Act.

Former president Mugabe had to intervene and clarify the law but damage had already been made, especially to the delicate financial services sector.

Minister Chinamasa had issued a statement to the effect that banks had complied with the indigenisation requirements while Zhuwao insisted to the contrary arguing those that failed to meet the April 01, 2016 deadline he had set would be shut down.

What is critical is not the two ministers’ fight, but the consequences of their wars to the economy. Within a week, there were long queues in banks and up to now, authorities have no immediate solutions to the cash shortages.

While presenting his 2018, $5,07 billion budget last week, Minister Chinamasa hinted there appeared to be no solutions on sight to end the liquidity challenges.

But as the country enters a new economic dawn, it is Zimbabweans’ hope that at least there is going to be policy coherence in Government. This intern assist other players and investors to make long term economic planning.

Minister Chinamasa proposed a cocktail of measures to cut recurrent expenditure, including civil service and diplomatic staff rationalisation, a reduction in the size of the executive, a cut in staff benefits and restrictions on travels.

The thrust was to boost market confidence.
There were numerous policy shifts that were announced during the budget presentation, but the most intriguing one is changes that were made to the Indegenisation and Economic Empowerment Act.

Indigenisation and Economic Empowerment Act
Argued Chinamasa: “Government is, through the Finance Bill being submitted to this August House for the 2018 financial year, amending the Indigenisation and Empowerment Act, to bring the following into effect from April 2018.”

In the Extractive Sector, the minister proposed that the diamonds and platinum are the only sub-sectors designated as “extractive”.

“Accordingly, the proposed Amendments will confine the 51/49 Indigenisation threshold to only the two minerals, namely diamonds and platinum, in the extractive sector.

“The 51/49 threshold will not apply to the rest of the extractive sector, nor will it apply to the other sectors of the economy, which will be open to any investor regardless of nationality,” he proposed.

Under empowerment laws, some issues of interest included the Reserved sector, which is only for Zimbabwean citizens, and for non-Zimbabweans, entry into the sector will only be by special dispensation granted by Government.

The approval will only be grated if its generally agreed it creates employment, affords the opportunity for the transfers of skills and technology for the benefit of  the people of Zimbabwe, promotes the creation of sustainable value chains and meets the prescribed socially and economically desirable objectives.

Noted Minister Chinamasa: “As we seek to attract both local and foreign investments, existing and potential investors become fully guided by the Amendments we seek to effect through the Finance Bill that is being brought to this August House.

“Those already in the Reserved sector, except gold panning, will be required to register and comply with our laws.”

It is these and among other policies that investors will be keen to see their implementation to ensure a sustainable economic investment environment where they know they can recoup return on their investment.

Ease of doing Business Reforms
The minister noted Zimbabwe’s ranking with regards to the ease of doing business remains unacceptably poor, with its ranking only moving from 161 out of 190 countries in 2016 to 159 in 2017.

Government is, therefore, seized with the need to implement a much broader array of Ease of Doing Business Reforms. President Mnangagwa has also pronounced himself over measures to address the ease and cost of doing business. Hence, the thrust of Government will be to make Ease of Doing Business reforms more practical and administratively accessible for actual day to day transaction processes to the ordinary Zimbabwean and foreigner intending to undertake business or investment. To prevent the errors of yesterday, monitoring and evaluation mechanisms need to be put in place to ensure consistency.

Land ownership and Utilisation
This is one of the areas that the policies enunciated by the Government have not been consistent. In as much as Government insisted on one man one policy, sadly on the ground there are many people, mainly those in government and the financial services sector who still have multiple farms.

President Mnanangwa in his inauguration speech, pointed out that under the “New Economic Order”, Government’s economic policy will also be anchored on agriculture. For the new economic order to work, beneficiaries of the Land Reform Programme are required to fully utilise the land and improve on productivity.

The land tenure in order to bring finality and closure to the management and ownership of land, is key to improved land utilisation and productivity on farms.

Security of Tenure
“The prevalent form of formalisation of land distribution to beneficiaries across the A1 and A2 land tenure system was “Offer Letters” issued by the Ministry responsible for Lands and Rural Resettlement.

“In order to address the security of tenure, especially with respect to the A2 model, Government introduced the 99 Year Lease, as a tool for formalising occupancy of re-distributed farms to beneficiaries who would have paid lease rentals, as well as for improvements, said MinisterChinamasa.

“To give confidence to beneficiaries that their occupancy is guaranteed, and cannot be withdrawn willy nilly, through the indiscipline of either youths, political leaders, traditional leaders or senior officials, Government is undertaking to institute measures to strengthen the legal standing of Offer Letters and 99 Year Leases.”

Going forward, through the 2018 Budget onwards, Minister Chinamasa said Government will set aside resources for strengthening capacity of the Surveyor General’s Department to scale up conduct of farm surveys, instead of outsourcing, for rapid issuance of 99 Year Leases.

But the disturbing cases of continued multiple farm ownerships has seen agriculture output coming down. Having completed the Land Reform Programme, Government should swiftly move to undertake periodic land audits through the Land Commission, established and operationalised in June 2016, with the mandate of ensuring accountability, fairness and transparency in the administration of agricultural land vested in the State.

Several people are in possession of vast swathes of land yet they do not have capital and technical capacity to work on the farms.

This idle land represents dead capital and promotes speculative tendencies, if not checked on the part of the land holders. As a result, the economy loses on optimal agricultural production.

Surely, to this regard, appropriate remedial measures to address prevailing idle tracts of previously productive land, in order to improve agricultural production in the country, will be guided by results from the comprehensive land audit.

The new administration therefore faces a litmus test to ensure there is no policy discord in Government. What central Government agrees on should be implemented, let no one stand in the way. The moment Zimbabweans and business in particular loses confidence with the system, it takes a lifetime to restore it. levels.

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