The curtains of celebration are gradually drawing home in Zimbabwe as President Emmerson Mnangagwa assumes office to lead the country out of its numerous ordeals. As expected, there would be calls to initiate state-driven economic reforms to solve the three development-related problems of cash purchasing power, institutional corruption and food shortages. Instead, Mnangagwa must learn from the consequences of Robert Mugabe’s 37-year experiment with collectivism.
On Purchasing Power Parity (PPP)
If Mnangagwa truly believes that Mugabe was wrong in meddling with the market economy, he should simply avoid following suit.
For instance, following the currency instability that started in the late 1990s greatly because of the confiscation of private farms from white landowners, Mugabe adopted a state-driven strategy that would eventually influence the bulk of present economic problems. He made the Reserve Bank of Zimbabwe routinely print money to fund budgets and reward his political allies until the currency bloated to an unmanageable level in 2009. This neither helped economic productivity nor encouraged investment as he promised.
Rather than experiment with another centrally-designed programme, it is best to have private-driven reforms by repealing laws that constrain foreign investment and property ownership. The return of corporate interest and security of property would almost instantly stimulate the value of the currency through a natural inflow of foreign exchange and increase in informal start-ups.
It is more interesting when considering the possible benefits of replicating this approach in the prolific mining sector. Zimbabwe has the world’s third-largest reserve of platinum, a highly-valuable commodity for electronic and medical industries. It also has lithium, which is in great demand by tech companies for making batteries.
With these enormous market opportunities, a complete shift from the usual state-led extraction and exchange would attract more investment and allow competition among corporations to gradually increase the PPP of the Zimbabwean dollar.
If pro-market reforms are necessary to resuscitating the Zimbabwean economy, reducing corruption to the barest minimum is more integral to sustaining it.
In 2016, Transparency International reported that corruption cost the country $1 billion annually. This is primarily because of the wide dependence on government to provide basic amenities including healthcare, education and social welfare, which are considered cultural rights in Zimbabwe. Mnangagwa should avoid this by not burdening his cabinet with unnecessary headaches. These are services best provided by a competitive private sector.
It is not rocket science that entrusting any administration to provide private goods invites corrupt tendencies. The enormity of government bureaucracies subject funds meant to finance these responsibilities to pass through numerous offices before actual disbursement and there is practically no way to avoid corruption. Instead, Mnangagwa should give individuals and corporations room to own up but concurrently ensure a tolerable framework of justice.
Keeping corporations and the government void of corruption may be achievable if the incoming president can experiment with the procedure of public interest litigation (PIL). PIL is a sure way of adopting the law to strategically realize social change. The procedure simply utilizes litigation and other legal actions to raise issues of broad public concern. As argued by Transparency International Zimbabwe, PIL can help provide a check on government agencies, statutory bodies and public officials by holding them judicially accountable through fair and unbiased judicial procedures. Mnangagwa should draw lessons from Kenya and Uganda as they have robust experience using PIL in addressing corruption.
The World Food Program estimated that some 1.5 million Zimbabweans are critically hungry – about 16 percent of the population. This is among the worst anywhere in the world. Although there are external factors to consider in addressing this problem, especially inflation. The primary considerations for Mnangagwa should be to repeal existing discriminatory land reforms and plan for artificial irrigation.
For example, the 2001 the ‘Fast Track’ Land Reform, which initiated a compulsory acquisition and redistribution of land, dispossessed over 4,500 white farmers of their farms and resettled a million black Zimbabweans instead. The policy critically affected the agricultural productivity that drives the economy and complicated the legitimate ownership of land. Moreover, the wide negative impact on agricultural exchange since 2001 affirms the unfortunate outcomes.
If Zimbabwe is to produce its own food to solve the shortage, it needs to allow fair land ownership. People are more productive when they have dividends to economize properties they rightful claim.
For a country where drought is the most common climatic threat to agricultural production and only 7.6 percent of its farmers practicing conservation agriculture, having a dependent alternative to rainfall is smartest. Zimbabwe should partner with countries that have recorded success in adopting the technique. Although, there could be financial constraints in funding such audacious undertaking but this is another reason it needs better relationship with corporations.
Zimbabweans have every reason to demand fast economic transformation after decades of suffering but, Emmerson Mnangagwa must be cautious yet market-oriented because every policy no matter how small, determines the future of Zimbabwe.