His many slavish supporters hyped up his scholarly qualifications, the international financial institutions where he had been a functionary and so forth. It was as if the man could walk on water like Jesus purportedly did, or jump over skyscrapers with a single leap, like Superman. Given all the hyperbole around him, his eventual appointment in October was almost an anti-climax. Having been parachuted into his position after more than a decade in places like South Africa, Tunisia, Switzerland, the Zimbabwean social, economic and political realities quickly and rudely began to dawn on him.
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THE economic Structural Adjustment Programme Esap makes four major recommendations: Firstly the devaluation of the currency; secondly, reviewing and reducing the number of public servants and their posts; thirdly, lowering support for industries; and fourthly, making agriculture more export-orientated. Fay Chung educationist The first demand is devaluation of the Zimbabwean dollar.
The informal market rate is so much more attractive, and is widely used. The first and essential step is to stabilise the currency as soon as possible. Zimbabwe adopted the multi-currency exchange rate in it worked extremely well except that it led to individuals and businesses as well as neighbouring countries utilising Zimbabwe to expatriate US dollars.
A more sophisticated approach is needed to ensure that such a massive loss of US dollars does not recur. Zimbabweans should be given opportunities to invest in Zimbabwean businesses, rather than just sending their money outside the country.
Zimbabwe does not have much trade with the United States. Instead, its major trading partner is South Africa. This would entail utilising all three currencies at the same time: the Zimbabwean dollar can be used to pay workers; the South African rand can be used to pay for imports from South Africa; and the US dollar for personal and business savings.
Such an approach will target the three uses of money adequately. One negative factor has been over-expenditure by the government, utilising more than is available to the country. This creation of billions of Zimbabwean dollars overnight naturally leads to inflation. This is creating Zimbabwean dollars through electronic banking.
This is another dangerous aspect of the utilisation of scarce foreign exchange to enable government to carry out its programmes: much of this is utilised to pay public servants striking for better pay. Some of it is corruptly used. Expanding the money supply to pay public servants is, of course, a very direct way of causing hyper-inflation, as the bureaucracy is not directly increasing the economy.
This is veiled in secrecy. Removal of secrecy and open prioritisation of the scarce foreign exchange would help to solve this fundamental Gordian Knot. The RBZ should only have enough foreign exchange for state purchases, and the rest should be available for banks to distribute to their clients. The distribution should be in the three alternative currencies suggested above. There is serious over-staffing in some departments, combined with poor salaries and poor conditions of service all round.
Support that are key to success such as materials and equipment, physical infrastructure, in-service training and supervision are missing, and means that although staff are paid, they cannot do their jobs properly.
It is imperative to deal with this challenge, by retiring those who are over 65; removing those who do not have professional qualifications for the jobs they are holding; and offering voluntary retirement packages for the many who see little future prospects in the civil service. A large number of youths have been enrolled as staff for political rather than technical and professional reasons, and may not have sufficient qualifications and experience to do a good job.
In-service training with internships and modest allowances will be attractive to many youths. The police, for example, are presently trained for only six weeks: offering a more in-depth and longer term professional training, especially integrated into distance education and internships, would be attractive to many youths who can then see their future in the police force. Agriculture can offer hundreds of thousands of youths such internships, using the under-utilised land to grow crops under training, internships and supervision.
Such internship programmes can be done through existing institutions such as secondary schools which already do agriculture; private farmers; non-governmental organisations; religious centres, etc. It would mean that each institution would select its own interns and follow a well-developed in-service training programme provided by agricultural extension workers and specialists.
The failure of the police and army in stopping the post-election demonstrations is an example of severe weakness of their training in the face of the more sophisticated tactics of the demonstrators and rioters. A number of civilians, mainly shoppers, were caught up in the violence and were injured or killed. The demonstrators had threatened to burn buildings, and actually burnt several cars. The Motlanthe report of provides a description of the more sophisticated strategies of the demonstrators.
The arsonists appeared to be small groups of well-prepared individuals, none of whom were caught. Thirdly, Berg recommended less support for industry by removing customs duties and allowing local manufactures to compete with international companies.
The impact of such policies has been disastrous for Zimbabwe, where the contribution of manufacturing industries to the gross domestic product has shrunk to a quarter of its past level Sources: CZI, the Zimbabwe Manufacturing Sector Survey and the World Bank Research shows that success depends on developing products first for the home market, and then expanding the market through export.
Without evaluating the home needs and market, it is unlikely that replicating the same industrial goods of the s and s will work, as those goods were designed for the small settler elite, and are unsuited to the needs and economic levels of the vast majority of the population.
A clear example is that Zimbabwe does not produce tractors and other agricultural machinery and equipment, yet it has more than two million small-scale farmers who desperately need mechanisation. These farmers are willing and able to mechanise, but they cannot afford to purchase the highly expensive high capacity tractors that are imported.
There is obvious need for tractors of all sizes: generally a large capacity tractor is only needed for two to three weeks of the year, whereas for the rest of the time a much smaller tractor is needed. Industrialisation, particularly to satisfy the needs of the local entrepreneur, is a key to economic development as well as to job creation.
Fourthly, agriculture remains the most important industry in Zimbabwe. Not enough has been done to boost the productivity and capacities of farmers. Sound planning and technical aspects were ignored, as were adequate equipment, training and supervision. Agricultural training combined with affordable inputs, can double output.
This would be of great advantage to the country which is presently importing most of its food. Although agriculture is given such prominence in the Berg report, agriculture has not received adequate support especially since Esap was adopted. Zimbabwe was self-sufficient in food before , when all subsidies were cut for small-scale farmers through the Grain Marketing Board.
It is essential that these small-scale farmers be assisted by having affordable fertiliser — the present cost of fertiliser is unaffordable to all farmers, and has a deleterious impact on maize production, as the price of maize is usually lower than the cost of fertiliser. Ironically, a Zimbabwean fertiliser company was subsidised by the Zambian government for many years, and this enabled Zambia to have a huge maize surplus which it sold to starving Zimbabwe.
The fertiliser company was utilising this subsidy to purchase essential imported inputs. Meanwhile, Zimbabwe has been importing cheap maize from outside instead of supporting its own companies. However, as farmers replaced food crops with tobacco, Zimbabwe has been forced to import food or to beg for food aid. The success of tobacco, which has received generous funding, training and close supervision from tobacco companies, provides an important model for all crops, including food crops.
Conclusion It is not possible to reject Esap completely as the powerful international financial institutions IFIs , the IMF and the World Bank, have such great influence on both donors and investors that contravening what they consider to be sound economic principles means that Zimbabwe will find it difficult to obtain investments. Four key areas are identified above. The issue of the money supply and exchange rate are fundamentally important.
The present system which allows the street money market to control the exchange rate combined with over-expenditure by government requires urgent correction. Streamlining the public services so that they can do a better job and be adequately paid is critical.
The inefficiency of the present public services makes it difficult to have good welfare services as well as productive investments.
State financial provision targeted at economic development and growth remains very critical. Present provision is both too low and incorrectly targeted. Provision should favour agriculture and manufacturing industries, and should combine training including technological updates, internships and marketing. The state budget should be radically revised so as to target economic growth. The state should examine existing institutions first to see how their capacities can be enhanced, rather than funding new organisations.
World Bank advice that government should lower assistance to industries should be analysed in detail. Present investment by the government into the private sector has not proved effective or profitable. There is need for substantial and targeted focus on supporting manufacturing industries which are known to be linked to economic growth and work creation.
Concentration on providing the machinery and equipment to allow the large agricultural sector to mechanise can double agricultural productivity. Machinery and equipment should be bought rather than gifted to political supporters: it is essential to include machinery and equipment which is affordable to small scale farmers. This is closely linked to the fourth Esap recommendation that there be more focus on agriculture.
Finally, the basic human rights, such as the right to a clean water supply, education and healthcare should continue to be respected as they are the foundations of a sound economy.
Chung was a secondary school teacher in the townships ; lecturer in polytechnics and university ; teacher trainer in the liberation struggle ; civil servant ; former minister of education ; UN civil servant These weekly New Perspectives articles are coordinated by Lovemore Kadenge, immediate past president of the Zimbabwe Economics Society.
ESAP IN ZIMBABWE PDF
THE economic Structural Adjustment Programme Esap makes four major recommendations: Firstly the devaluation of the currency; secondly, reviewing and reducing the number of public servants and their posts; thirdly, lowering support for industries; and fourthly, making agriculture more export-orientated. Fay Chung educationist The first demand is devaluation of the Zimbabwean dollar. The informal market rate is so much more attractive, and is widely used. The first and essential step is to stabilise the currency as soon as possible. Zimbabwe adopted the multi-currency exchange rate in it worked extremely well except that it led to individuals and businesses as well as neighbouring countries utilising Zimbabwe to expatriate US dollars. A more sophisticated approach is needed to ensure that such a massive loss of US dollars does not recur. Zimbabweans should be given opportunities to invest in Zimbabwean businesses, rather than just sending their money outside the country.
Will Zim’s current Esap II work?
The country ranked among many middle-income countries such as Turkey, Singapore, Malaysia and Nigeria while trading with the US and Europe. Notwithstanding UN sanctions, the country, at the time, had the fourth strongest economy in the world. For the first post-independence decade, the new Zimbabwean Government focused on programmes aimed at building the health and education sectors. Meanwhile, the economy continued to be run as in the pre-independence period, as a command economy. The country soon faced the ravages of droughts in the earlys that impacted negatively on growth. The drought of was followed by another in when the contribution of agriculture to GDP growth was adverse.