ANALYST COMMENTS ON MUNYARADZI HWENGERE’S SUNDAY MAIL ARTICTLE
Written by carol phiri on December 30, 2018
This article by Munyaradzi Hwengwere is an important contribution towards starting the debate on what we should be doing to make 2019 and our country much better by turning the corner.
It helps us understand what is at the core of our economic problems that have been induced by politics.
I agree with Munya that our biggest problem is the lack of production, but I will go further and say that it is partly caused by lack of ideas and innovative minds in government.
It is a political problem that has economic ramifications.
Government controls the door which either opens for citizens to do things or gets shut in their face by stagnant and clueless civil service bureaucrats and by cabinet ministers demanding bribes for projects to be sanctioned.
Munya is right that we have become a consumerist society, one which has a strong appetite for foreign goods and yet we are not generating exports to match that unrestrained appetite for imports, creating an unimaginable trade deficit between our country and the rest of the world, especially South Africa.
Japan’s increase of labour productivity since the 1930s came from manufacturing and service industries which then formed part of its exports that have led it to becoming the third biggest economy in the world.
Zimbabwe’s economy was bigger than that of China in 1975 and yet today China’s economy is the second biggest in the world after the US.
China’s GDP was at $178 and Rhodesia’s GDP was at 718 in 1975.
It is called leadership and setting a country’s priorities right, it is also about Local production and industrialization.
Munyaradzi also touches on an issue I have been talking about for years, yes we have US sanctions imposed on us, but when Ian Smith had sanctions imposed on Rhodesia, that became the most innovative historical period for Rhodesia.
They turned Local and pushed what they called the Import Substitution Program into motion.
Instead of drinking Oude Meester brandy, they innovated and ended up with Viceroy.
Ian Smith jokingly remarked that the only think that he missed because of sanctions was Marmite.
They stepped up their manufacturing industrial base and the very industries that now have cobwebs in the Southerton and Granite side areas were built during that time.
Companies like RISCO (ZISCO) and the Rhodesian Railways became the mainstay of the Rhodesian economy.
We have destroyed all that and we take no responsibility for those carcasses, no we don’t, it is sanctions we bellow all the time!
The Rhodesian Journal of Economics published by the Rhodesian Economic Society is a treasure trove for those willing to understand these issues in detail.
Rhodesia looked at industrial growth, industrialization and employment, economic activity and industrial development and economic growth through industrialization.
Many today argue that local goods are expensive, yes that is true, but WHY?
It is because we inherited the Rhodesian industrial architecture and did nothing to retool or expand on it and therefore old technology is equal to expensive production and that is reflected on what we pay for local goods on the till.
This again is a product of lack of exposure to global trends and lack of ideas and innovative minds in policy making that either block young people with solutions because of their comfort with the old.
So sanctions can also create a perennial excuse for bad leadership which lacks ideas and innovation, yes they do.
I have met many local and international investors who have come to Zimbabwe post November 2017, but they left frustrated because officials either ask for bribes or they are ignorant of what is being talked about, we need new heads in those spaces, we need new bright minds!
Wherever there has been a local substitute, I have always bought Local if it is priced within reason, price has been and will always be the key to local products succeeding.
So we need to retool our industries like what the Rhodesians did post 1965, we also need to build new ones.
I agree with Munyaradzi again on the point that foreign exchange should be given as a matter of priority to local companies that are building import substitution businesses.
This will significantly reduce the import bill and will increase our exports because they would be properly priced if the industries are using modern equipment.
He also touches on currency distortions, Mthuli Ncube and John Mangudya’s illusional 1 to 1 rate has made the little that we export very expensive.
Even if we use the black market rate of 1 to 4, we are competing with South Africa which is at 1 to 14 to the US Dollar, a reality which results in South Africa’s goods being cheap to buy on the foreign markets plateau.
As Munyaradzi correctly argues, this is better shown through the US and China currency wars where the US accuses China of weakening its currency to stimulate its exports by making them cheaper.
The political and business elites flaunt their million dollar cars and yet that money could have been used to retool industries which would lead to less importation of foreign goods and more exportation of Local products.
Where will the foreign exchange for medicines come from when we are not working and selling our goods abroad?
Japan has no minerals like Zimbabwe, but through innovation is has succeeded after being bombed into oblivion during the 2nd world war by the US and its allies.
Today South Africa has made it attractive for companies like UK’s Vodafone to set up its call centers there, that is part of service industries that are bringing in foreign exchange into South Africa.
Remember my article which talked about creating Free Economic Zones for places like Kariba in order to attract foreign direct inflows for industries and tourism sectors?
Doing that for call centers creates jobs and foreign exchange and we lose nothing by doing so because those foreign companies like Vodafone will find a home elsewhere to house their operations if it’s not us who are able to attract them.
They are only leveraging on our intellectual and literacy levels, so why not do it when bigger economy like India have done it?
So yes, we need to turn to diversify through creating import substitution undertakings to compensate for traditional source imports that have now become more expensive for our economy, because we have no money to fund such goods that have become a luxury!
We must process our raw materials locally to add value to our exports, that is the only sensible thing to get our economy going.
Can we do it with the current lot? The work of the civil service bureaucrats and the political elites is evident for all to see.
Have you noticed that we haven’t really spoken about that cancerous behavior that has destroyed our state, CORRUPTION?
Yes, we are currently on a lonesome journey to nowhere until we snap out of our delusional beliefs.
Thank Munyaradzi Hwengwere for your contribution towards opening this all important debate.
We might disagree on small points but I can’t imagine anyone who is a patriot failing to understand the cost of our terrible mistakes.