eBusiness Weekly
Tinashe Nyamunda
With just over a year to go before the curtains come down on the latest economic blue print, the Zimbabwe Agenda for Sustainable Socio-Economic Transformation (Zim-Asset), it is appropriate to evaluate its record. Zim-Asset is scheduled to be implemented between October 2013 and December 2018.
As political protagonists work on their economic manifestos, I hope I am not jumping the gun by evaluating the record of Zim-Asset.
Zim-Asset is the latest in the history of economic blueprints in Zimbabwe.
Examples include the Economic Structural Adjustment Programme (ESAP) of the 1990s, Zimbabwe Programme for Economic and Social Transformation (ZIMPREST 1996-2000), Millennium Economic Recovery Programme (MERP, 2002- 2002) National Economic Revival Programme (NERP, 2003), Macro-Economic Policy Framework (MEPF, 2005- 2006), National Economic Development Priority Programme (NEDPP, 2007), Zimbabwe Economic Development Strategy (ZEDS, 2008 but aborted at conception), and the Short-Term Economic Recovery Programme (STERM, 1 and 2, 2009-2012).
Many of these programmes were implemented and summarily abandoned, but even those that ran their course failed in their objectives as Zimbabwe’s economic history will attest.
Zim-Asset was a plan crafted following ZANU-PF’s 2013 election victory to pursue, accelerated economic growth and wealth creation, to achieve sustainable development and social equity anchored on indigenisation, empowerment and employment creation, propelled by Zimbabwe’s human and natural resources.
It identified four strategic clusters: Food security and nutrition — social service and poverty eradication — infrastructure and utilities; and value addition and beneficiation.
To achieve Zim-Asset’s vision towards an empowered society and a growing economy (boldly projected to grow by 7,3 percent between October 2013 and December 2017), the Government established key result areas, strategies and implementation pillars to yield rapid results (termed quick wins in the policy document) in the shortest possible time frame between 2013 and 2015, but with other deliverables targeted up to December 2018.
The rapid-results plan was supposed to be funded by various financing mechanisms such as tax and non-tax revenue, leveraging resources, sovereign wealth fund, issuance of bonds, accelerated implementation of public private partnerships, securitisation of remittances, re-engagement with the international and multilateral finance institutions and financing options such as BRICS.
Crucially, the process of growing the economy on the basis of this plan would be based also on; sound fiscal and monetary policies, the reorientation of key institutions and services including the Industrial Development Corporation (to move away from production towards funding industrial projects), Mining Exploration Company, Zimbabwe Mining Development Corporation, Minerals Marketing Corporation of Zimbabwe, the Small Enterprises Development Corporation, resumption of operations at ZISCO Steel, improved electricity and water supply, rehabilitation of rail, road and air infrastructure among other ambitious programmes.
The above partially summarises the aspirations of the crafters of Zim-Asset and its strategic goals. What follows is a brief evaluation of its progress. There are various perceptions about Zim-Asset.
Many who tow the Government line laud it as a success, others suggest that it is a noble initiative that is difficult to implement. But scores of critics argue that it was a colossal failure, really just an economic band aid over an infected leaky wound that is our economy. But to be fair, the best way to judge the plan is by looking at its results.
In my view, Zim-Asset was premised on a wrong platform from the beginning.
The justification that it was designed to bust sanctions is inaccurate for many reasons, chief among which is the impression that Zimbabwe’s economy was fully dependent on Britain and the United States although these countries have huge influence in global finance..
I have argued elsewhere that a comparison with the Rhodesian economy which faced comprehensive sanctions from Britain and the United States will provide a crucial historical example of the alternatives that Zimbabwe has in terms of trade. Sanctions are rarely fully effective given the diversity of interests of world powers and their strategic trade needs.
For me, Zim-Asset was a highly ambitious but well-meaning programme, attempting to fast track solutions to the country’s problems which had been 33 years in the making, and which more than ten other economic programmes had failed to resolve.
In terms of infrastructure development and utilities, the Government can claim some successes in the commissioning of the Victoria Falls airport and slight increase in regional flights, the expansion of the Kariba South hydroelectric power station and Hwange thermal power station, City of Harare water and sewage rehabilitation, the completion of Tokwe-Mukosi dam and the efforts that have been made towards the rehabilitation of roads, particularly the highway from Mutare through to Bulawayo.
Also, the inputs scheme and agricultural funding for 2016 and 2018 if sustained and properly implemented could be another positive for beneficiaries. But these gains are a far cry from the high expectation that Zim- Asset spelt out.
The success of Zim-Asset was crucially dependent upon the availability of capital. Among the results would have been an expanding, liquid economy that would have re-engaged with the global economy. This capital was supposed to be raised through various financial mechanisms locally and a re-engagement with global multi-lateral institutions. But relations with the IMF and World Bank have barely improved.
Locally, although taxes from a severely depressed tax base and import duties have been raised, they have been far below expectations. Save for very insignificant donor funds, most of the capital raised for Zimbabwe has been, supposedly, from the African Export and Import Bank (AFREXIM) ostensibly to fund the export incentive scheme which is really a de facto but unstable exchange rate between the Reserve Bank of Zimbabwe printed bond notes and foreign exchange.
The re-engagement with multi-lateral lending institutions did not materialise specifically because of lack of confidence in the Zimbabwean economy as well as political pressures from outside and therefore no capital was raised from there.
The successes that the Government can claim to have achieved through infrastructure development were funded mainly through local Treasury Bills debt in excess of $7 billion rather than new capital.
The other ambitious targets include the revival of the country’s largest steelworks industry, Zisco Steel (Zim Steel).
The industry collapsed, that by 2008, it was producing less than half of the 25 000 tonnes it required to break even.
But in 2011, the country struck a deal with India’s ESSAR group which took possession of 54 percent of the ZISCO group of companies, with Government retaining 36 percent and a consortium of private investors holding 10 percent.
As Zim-Asset was drafted, the hope was that the $700 million would be paid off and this partnership would yield a complete revival of this strategic national industry.
But by 2016, the deal with ESSAR had collapsed, with the foreign investor pulling out and ZISCO left with little alternative but to lay off many workers as its capacity once again declined.
