eBusiness Weekly
Chris Chenga
African governments are frequently found pursuing populist policies that lack business sense. These policies are often driven to achieve ideological intentions; such as fair distribution of resources or wealth, equal dispersion of what are believed to be public goods at a negligible expense to the end-user, amongst many other ideally well-intentioned policy imperatives.
In most cases populist policies come back to haunt these government as they depress fiscal outlooks with insurmountable debt burdens, or there is poor delivery of whatever public goods are meant to be easily accessed amongst broad citizenry.
To avert these calamities that chain African governments to global lenders or multilateral institutions, wise governance must start to perceive policy from the lens of ideological effectiveness and socio-economic practicality.
The two must balance out and sustain one another. If a policy entraps a government in debt — to be read as its taxpaying citizens in debt — then that policy is ideologically ineffective. If a policy ends up producing a shortage or lesser quality of public good provision, then that policy is ideologically impotent as well.
A narrative must be introduced to our governments along the pillars of policy selection process and rotational sustainability.
Firstly, in Zimbabwe we are at a stage where we require targeted policy.
Targeted policy is only as good as the entities targeted as beneficiaries. Policy is implemented on an expectation of an actionable response by a targeted demographic.
For instance, a tax exemption incentivises certain demographic to increase a particular activity whether personal or corporate. It could be to incentivise more spending in environmentally friendly energy, capital equipment or whatever action that fiscal authorities deem a desirable outcome of policy.
Through this targeted nature of policy, success of that policy is inherently dependent on the targeted entities. Attach this logic with the fact that most governance policies come at an opportunity cost of targeted alternatives, there is greater emphasis that the targeted demographic actually performs or delivers the desirable outcome.
Consider Command Agriculture, as it is receiving fiscal support, and more recently monetary support of foreign currency preferential access.
Those resources have an opportunity cost that could be, say infrastructure spending or mining facilities to artisanal miners. So there must be an intentional selection process within the farming demographic receiving these resources, to enhance the likelihood of effective utilisation of these resources.
Such a section process may emphasise farmers’ skill set, productivity, and other performance metrics. Similar policy diligence should be applied to other empowerment initiatives such as tender allocation to disadvantaged demographics.
For instance, there is an increasing propensity by our governments to create contracting or procurement benchmarks for youth or local entities by state utility companies.
This would only be ideologically sound practice if there is a vigorous selection process that ensures that entities awarded these contracts can actually perform, at the very least to a par with any conceivable opportunity cost.
Secondly, public policy must have a rotational mechanism for sustainability. To revert back to a policy such as Command Agriculture, there must be mechanisms in place that ensure that “winners and losers” can be identified in terms of successful outcomes. For instance, after a season evaluation must be done on yield performance amongst many factors that influence that yield.
Farmers can then be ranked on their warrant to continuously receive fiscal support. This rotational mechanism is existent in market economies where competition means only successful businesses continue at the benefit of price and quality in respective sectors.
Similar must apply in public policy where only the demographics that fulfil desirable outcomes are ensured a going concern, while those that do not, to the relief of fiscal resources and opportunity cost are existentially vulnerable.
That can apply as well in the aforementioned case of contracting disadvantaged demographics. There must be rotational mechanisms to ensure performance and delivery of agreements. For instance, state utilities must have recourse for fiscal reasons in instances where contractors do not perform of deliver.
The rotational mechanism ensures sustainability of policies by enhancing the likelihood of performance and delivery. It also enhances the selection process by keeping only the competent within policy frameworks, where in numerous cases we have had incompetent entities at the centre of policy frameworks.
Indeed there are vices that threaten many policy initiatives, such as corruption, rent seeking, and patronage. These often happen because of the lack of the selection and rotational mechanisms. Targeted policy-making should not be directed by personal factorizability, insider dealing, or kickbacks to policymakers themselves.
Targeted policy-making should be clearly sketched out to selection defined by performance and outcome metrics. The continual performance and delivery must then be ensured by rotational mechanisms. Only through these two rubrics can corruption, rent seeking, and patronage vanish.
This is a conversation that is specific to our governments, and may not practical to market notions of developed economies. The fact is that different economies are made up of vastly different demographics of economic mobility.
Unfortunately, the phrase populism is often hurled out to any policy initiatives that try to attend to the stunted mobility of local majorities in developing economies.
Zimbabwe would be prejudicing itself off social justice if it played along to these superficial populist interpretations.
We really do need targeted policy-making to uplift and empowerment local majorities; that is not merely political rhetoric but it is an economic imperative. However, policy of targeted nature has to be underlined by effective selection and rotational mechanisms to ensure successful outcomes.
