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In the aftermath of Tsvangirai's death

Zimbabwe: The need for an economic paradigm shift

17/01/2018 00:00:00
by Seewell Mashizha
Zim’s balance sheet & need for new impetus
2018 election: Zim & the wealth card
Zim: The curse of the ‘Amai Syndrome’
Parties to be judged on appeal, results
The Coriolanus factor and its aftermath
Era of intrigue, pacts & accommodation?
When a stich in time could save nine
G40 Crew now Zim’s Gang of Four?
Kenya: What parallels for Zimbabwe?
Korea and Kenya: Which way Africa?
Africa must negate US's global empire
Zim’s silly season in politics continues
Yesterday’s ogres & restorative justice
Subverting the golden rule in our time
Seewell Mashizha: When bad boys return
Zimbabwe: Obstacles to Pan-Africanism
Generational politics & something seismic
2018: Looming battle of manifestos & issues
2018: As the MDC-T threatens violence
Envisioning the new day that must come
Of Zim’s political history and the convulsions
Gukurahundi: no single narrative will do
Prejudice and black achievements
Mashizha: Negating western propaganda
Rival political interests: Strengths & flaws
2018 and Zanu PF’s liberation war DNA
2018 elections and the opposition
Of wily foxes and tearful crocodiles
Time for Africa to shape its own destiny
US & the rise of Trump: An interpretation
Mashizha: A new world reportage by Africans
Mashizha: telling our own stories as we see them
Zim: The curse of a blue print syndrome
Seewell Mashizha: Life is an open book
Seewell Mashizha: Africa’s interests
New day dawning or world done for?
Why Zim needs own glasnost, perestroika
Corruption: Tracking Zim’s slime highway
Africa through her revolutionary seers
Prophetic Edwin Hama: Waiting for a new day!

Certain interlocutors of this column, in spite of themselves, are victims of its ‘fatal attraction’, so to speak. Like a broken record they keep playing the same thing.

Regrettably, only occasionally do these passionate gentlemen ever address the content of the column or even refute it with verifiable evidence. Nevertheless the marketplace of ideas is open to us all. I am not talking about uniformity in the expression of ideas, but I am, in fact, recognising and applauding divergence. 

Regarding my story of last week, a reader going by the name Chiremba Wematombo, who, presumably, holds a doctorate in geology had this to say:

I know that all Zimbabweans who are cheated by the likes of Makandiwa, Magaya, Bushiri or even the Nigerian club of Ashmoleoe Chris and the other one who could not predict the collapse of his church, Joshua, will have to wake up to the fact that these guys are tricksters making a lot of money out of these hapless individuals! It’s however difficult to understand this idiot who appears not to know that Zanu and Mugabe have been able to cheat Zimbabweans for the last 37 years with vote buying trinkets including grain, fertilizer, seed etc. and this idiot is convinced that MDC could ever have the kind of money put together by Zanu over the years through rampant corruption? I personally think that this idiot is a total waste and write off and that I am also wasting my time on this fool!!!

The unsavoury vitriol and insults notwithstanding, this reader does raise an interesting point regarding some of the campaign tactics used by ZANU-PF over the years. A comparison with those of the MDC-T is unavoidable, then and now. That has given me an idea for a story in the not-too-distant future. Nevertheless, to call grain, fertilizer and seed trinkets is the height of hypocrisy. Peasant farmers definitely do need seed and fertilizer, and in poor-harvest years or drought-stricken ones, they usually also need grain to avert hunger and famine. The MDC-T, like ZANU-PF, was a recipient of CDF allocations (USD50 000) and could have used the funds productively and demonstrated its brand. But, that is a story for another day.

The way things are in Zimbabwe at this point in time requires us all to put our hand to the plough. I am positive that wed can use this column to discuss pertinent issues as indeed we must. In the words of Emmerson Mnangagwa, the current situation should be characterized by politics and economics rather than just by politics alone.


According to some schools of thought, ‘Higher economic growth means more demand for credit, which drives up cost. In this case, the cost is interest rates. This economic relationship between growth and interest rates is why, over time, bond yields track nominal GDP growth.’ Taken to its proper conclusion this assertion would mean that when there is an economic meltdown, as there has been in Zimbabwe, the cost of money should depreciate and therefore have more takers. In fact, financial inclusion ought to be at its highest when there is low economic growth.  This binary is just one of many such binaries where so-called experts will have greatly divergent views. Zimbabwe, more than ever before, needs experts willing to travel the road not travelled and ready and willing to be trailblazers. Clearly, we need to do business in ever newer ways, but without previous encumbrances such as under-receipting, fund externalization and other forms of corruption.

Economics is not an exact science. Accordingly, there is quite some supposition and speculation regarding the causes of economic malaise and what the possible solutions might be. Some writers assert that the United States of America, has a trade deficit in excess of USD7, 3 trillion. The official figure for the last 6 years, however, is USD50 billion. Regardless of the disparity between the two sets of figures, the US continues to be an economic powerhouse and still exhibits considerable growth and development. Coupled with its trade deficit, the budget deficit of the US is similarly the greatest in the world. Yet there are many who condemn deficits outright and associate them with failure. This in some ways will always be debatable and immaterial. In the next few instalments the column will largely be addressing economic issues.

We can, to begin with, examine what is arguably among the most critical issues of our time in Zimbabwe: the apparent cash shortages that continue to bedevil even our lives and our socio-political dispensation. Finance and Economic Planning Minister, Patrick Chinamasa, was recently cited as having said that the cash crisis in Zimbabwe is an artificial one, or words to that effect. It is for this reason that I use the term ‘apparent cash shortages’.

The Minister asserts that there is really quite a lot of money everywhere; the trouble is that it is not circulating. A mechanism must therefore be urgently designed to address what the Minister views as being the incumbent problems. In his words it all essentially boils down to a lack of trust in the finance houses of our land. The RBZ and what it does henceforth as an institution will be of consequence, going forward. Its operations must be open and transparent and also be totally free of the kind of mistrust and suspicion currently associated with it.

Whatever it takes, the Central Bank must grow the value of the country’s nostro deposits and use them as they should be used, that is, as an instrument for addressing contingencies. With that kind of arrangement in place, it would not be necessary for monetary authorities to raid people’s foreign currency account savings.by the populace has to be found and found soon. At the very least such an arrangement is the beginnings of restoring national trust and confidence in its financial systems.

Something else that needs doing is the education of all and sundry including even the peasants in the remotest of places in Zimbabwe. But above all the bankable public must be brought on board and used as role models. The people are all too keenly aware of the veracity of the proverb that says, “Once bitten, twice shy.” It will take some persuading to get them to sleep soundly again with their money in the banks.

A major hurdle that Zimbabwe must overcome is the people’s appetite for hard currency. In the long run, the situation will be untenable. For instance, our exports tend to struggle internationally because being quoted in US dollars they tend to be comparatively more expensive. This places the country in a catch-22 situation where we need the US dollar and also don’t need it. Paradoxically, the United States trades effectively in its currency. It does seem that Zimbabwe too, ought to be similarly advantaged, but it isn’t. This impacts negatively on capacity utilization and leads to underperformance and the resultant foreign currency shortages associated with it.

If high economic activity escalates the cost of money, the logical opposite of that is that subdued economic activity moderates the cost of money and there ought then to be a surfeit of it. Monetary authorities are going to have to be at the peak of their imagination and innovation. They are going to have to lure all the money hibernating among the people by creating conditions that make it impossible for anyone not to want to deposit their money in the bank.

Educational institutions at all levels must sell new impetuses such as the need for domestic investment. If investment portfolios can be packaged in such a way as to include bond and treasury bills that can be used to rope in everyone with excess liquidity in terms of their needs. Because these instruments yield dividends/interest in the short to medium term they are likely to be attractive to people who normally do not invest in anything.

The Ministry of Finance and Economic Planning should have departments dedicated to research and investment guidance. Their role would be to help small scale enterprise grow by coalescing into firms and companies. Cross-border traders, vendors and others can with proper guidance and with the participation of qualified accountants and/or bookkeepers, form viable business enterprises in different sectors of the economy, and not just in the retail industry. This would be one way of encouraging entrepreneurship as opposed to the job-seeking syndrome.

Further assistance by the relevant line ministries can be in the area of decision–making and portfolio-selection. Most domestic investors, particularly those from the lower end of the economic matrix whose experience with investment may be next to nothing, will need assistance with the choices they make regarding whether or not to opt for greenfield or brownfield investment. Whatever the case, foreign direct investment will flow in with alacrity, if there is evidence that domestic investors are dedicated. And, with resolute action, we might in the end, be able to mop up the unacknowledged excess liquidity.

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