Economy: What Government ought to do

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By Saul Gwakuba Ndlovu

THE recent, unjustified, sudden increase of prices of many consumer commodities and their immediate shortage in some individually-owned grocery shops as well as in most supermarkets in Zimbabwe caused widespread alarm, consternation and despondency among many people.
To worsen the situation, some entrepreneurs started to demand payment for all their goods in either US dollars or in the South African rand.
Many of them were still making the same demand at the time of writing this article.
They were actually advising some of their potential customers to go to the illegal money-changers (osiphatheleni) to buy the rand or US dollars!
The official exchange rate between the Zimbabwean Bond note and the US dollar is 1:1; but the black market rate is much higher in favour of the US dollar and can be as high as one US dollar for six Bond notes.
Commodity prices have, meanwhile, been raised by well more than 50 percent as is the case of beef or commuter omnibus fares.
Butcheries buy cattle in Bond notes at the old average prices that range between 400 and 600 Bond notes but, surprisingly, demand US dollars for the beef they sell in their butcheries.
Some supermarkets sell a kg of beef at 16 Bond notes.
That means, for 400 Bond notes, a consumer can buy a paltry 25kg of beef, thus spending the price of a cow or ox on that little quantity of beef.
It is a matter of great interest indeed to speculate at how much supermarkets are charged in US currency by the supplier, that is to say the butcher.
It is public knowledge, however, that cattle ranchers have not increased the prices of their livestock.
As for the commuter omnibus operators, they justify their 50 percent fare increase by what they say is a rise in the fuel and spare parts prices.
We are quite aware, however, that the prices of petrol and diesel have not gone up ‘at the original service.’
It seems as if this strange and utterly unethical economic development is caused by the country’s black market which has taken control of the foreign currency’s availability and exchange rates.
This brings us to the most important question about this matter: What should, and can be, done and by whom to correct this unfortunate situation?
The problem is multi-dimensional while its solution is likewise bound to be multi-faceted.
Some of the causes of Zimbabwe’s economic challenges are in the country’s internal environment which comprise Government policies, excessive human resources, little national financial resources, inefficient national administration as well as natural factors that include extraneous variables such as unfavourable weather conditions, drought being an example.
Some of the causes of either the stagnation or the decline of the Zimbabwean economy lie in its external environment which we will discuss in due course in this article.
Presently, a bird’s eye view is given of some of the policies that can contribute to the economic development of Zimbabwe which include investment in labour-intensive and export-oriented industrial projects.
To reduce the country’s high unemployment level, it is most important to promote investment in labour intensive projects as employment will contribute to poverty alleviation.
The mining sector is suitable for this type of investment, and some Asian, South American and Middle East countries could be approached with investment proposals, one of whose main characteristics is conditional temporary tax exemption.
Export-oriented investment can increase Zimbabwe’s monetary wealth by foreign earnings.
Adopting and implementing such a policy would likely act against value addition on some of the country’s mineral products.
If the basic exploitation of the product or products is labour intensive, the socio-economic advantage to the nation would most likely be higher than exporting value-added minerals whose extraction is capital rather than labour intensive.
In any case, Zimbabwe exports raw tobacco more than value-added or finished tobacco products such as cigarettes, cigars, snuff or pipe tobacco while earning literally billions in foreign currency.
Doing the same with some of its minerals and timber produced by labour intensive companies could do the same, and should be thoroughly rationalised as well as fine-tuned.
The main benefit from investments in Zimbabwe should be massive employment and foreign currency earnings.
The Government could negotiate with some foreign countries for the exportation of contract workers, most of whose earnings could be remitted back home and thus improve the national foreign currency condition.
Zimbabwe is known worldwide for having a large number of work-oriented people who range from the functionally illiterate to the most highly educated and socio-culturally sophisticated professionals.
Between those two social classes, there is arguably the largest segment comprising people with a general average of some 11 years’ education.
Those on the lowest rung of this social ladder can be hired to perform menial labour while those in the middle segment are most amenable to training as their literacy levels enable them to read and interpret handbook instructions in English and also in one or two indigenous Zimbabwean languages.
The topmost social group comprises people who are either actual or potential managerial material — what industrial psychologists refer to as ‘management’ material.
The Zimbabwean Government could be well advised to look into the possibility of exporting personnel to some Arabic and Australasian nations on similar principles as those of the Witwatersrand Native Labour Association (WENLA), a South African-based mining industry labour recruitment organisation.
Zimbabwe, at state level, could work out and agree with governments of nations involved in massive industrial development to supply them with such contract workers.
As already stated, the conditions could be similar to those used by WENLA, mutatis mutandis to accommodate modern International Labour Organisation (ILO)’s current statutes but not those at large.
Such international labour exchange agreements could help reduce Zimbabwe’s unemployment level, earn the country foreign currency and enable those involved to acquire some knowledge of, and experience in, some modern industrial technologies.
A decision in this direction can be taken as a practical part of President Emmerson Mnangagwa’s campaign to restore Zimbabwe to its earlier status in the global family.
In our next instalment, we shall look at other causes of Zimbabwe’s socio-economic decline, and what can possibly be done to reverse the trend.
Saul Gwakuba Ndlovu is a retired, Bulawayo-based journalist. He can be contacted on cell 0734 328 136 or through email. sgwakuba@gmail.com

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