Among the top priorities for the Zimbabwean economy is the trade balance. It is a consistently bemoaned indicator of the level of production within the economy and foreign currency earner for a country without much monetary expansion levers. Perhaps just as important, the trade balance is also a good measure of the competitive appeal of our products to the rest of the world.
Often missing from stakeholders’ appraisal of the trade balance, however, is the computation and potential contribution of the services and creative sectors to the trade balance.
This is particularly odd, as it seems to be popular convention that Zimbabweans are supposedly literate and personable human capital, which would naturally assume a greater desire for our intellectual produce by our foreign peers.
Why is it then that when the pressing issue of trade comes up, services and creative sectors are marginalised from discourse, even by our prominent policymakers?
Smart economic planners realised years back that services, and particularly creative sectors, are resilient competitive advantages if capacitated to exploit the unique talents and characteristics found in citizens.
Other nations that may not inherently possess an exceptional level of unique talent and characteristics in services and creativity are proactive to have structures that assimilate or naturalize this crucial competitive advantage in human capital.
Take the United Kingdom for instance. While it has a trade deficit overall, the economy has sustained a trade surplus in services for several decades. In the third quarter of 2017, UK service surplus grew to a record £27,7 billion led by business and financial services. It accounts for a fifth of total European Union services exports.
The fascinating thing about services is that it is intellectual produce, which arguably Zimbabwe has to a notable extent. There are many metrics which may add credence to this assertion, for instance, the number of technical experts that are working in foreign jurisdiction in the services sector such as Finance and Accounting.
Actually, one of the Big 4 accounting firms decided to make Zimbabwe its central sub-Saharan hub a few years ago. However, this never materialized because of insufficient infrastructure, particularly for fast communication and interconnectivity to nodes in the company’s regional centres.
Another multilateral institution has similar aspirations but we equally overcome by the aforementioned challenges.
Indeed then, there is recognition of Zimbabwe’s potential as a services centre that exports its intellectual produce, particularly in banking and finance.
The question then for Zimbabwean policymakers is to study how other nations have created an environment to develop services that are export oriented.
Mauritius has taken this leap ahead of other African countries, positioning itself as an export centre for financial services. It hopes to further extend this reputation into diversified services such as medical, marine, education and training services. The country’s literature on its service export strategy is readily available.
In a book titled “The Export of Tradeable Services in Mauritius: A Commonwealth Case Study” by Percy S. Mistry, Nikhil Treebhoohun, Mauritius supposedly had intentional stakeholder deliberations that incentivised heavy private investment into infrastructure to support services exports.
A large chunk of the infrastructure investment was private because with a clear strategy and evident returns from export services, the risk profile of such investment was reduced as all stakeholders understood the long-term benefits of export services.
This is direct the opposite of the infrastructure sharing confrontation that government has with private sector entities; the cost being the loss of aforementioned opportunities of multilateral and regional entities deciding not to set up the central operations in Zimbabwe.
Zimbabwe should conduct a thorough analysis on its humanistic and geographic competence to exploit its services potential.
For instance, the nation’s geographic location makes it opportune for connectivity in the region.
Consider the NRZ deal that was given a leg up by the country’s positioning in regional rail network linkage. Commerce from the East and South has to go through and connect on platforms that are in Zimbabwe; platforms that are both physical and digital, and as these platforms are interphases they require execution of services, whether they be financial, administrative, or informational.
The value of services, and especially creative sectors, is that they are not as volatile and cyclical as manufacturing and commodity driven exports that have fluctuating prices.
In an article for the Financial Times, titled “Trap creative industries to boost African growth”, African investment adviser, Aubrey Hruby presented a strong case for the arts and creative sector focused macro-economic strategy by our governments.
She argued that ever since Nigeria’s economy went into recession in 2016, the arts sector has doubled in employment and revenue generation over the same time frame. She argues the resilience of the sector, but more so its lack of exposure to typical economic slump factors that are quick to slow growth in manufacturing and resource exploitation.
Similarly, as South Africa’s economy has slowed to anemic growth, it is estimated that the South African entertainment economy will have annual growth of 4,4 percent between 2015 and 2020. This is more than the overall economy’s growth pace.
Today in Zimbabwe, some of the most frustrated professionals are those in the arts sector.
Indeed the proposition of agriculture, mining, and manufacturing has been expounded on at many events and research.
But there is a strong case that a vibrant creative sector can be as lucrative for the economy as these sectors. For an economy with small economies of scale for example, manufacturing costs in textiles and clothing in Zimbabwe will be very difficult to lower to a point of global competitiveness.
Thus, one can argue that the policymaker push to kick start manufacturing ahead of creative industries is an economically false proposition. Perhaps provocative, but let us put the research in so we can factually compute and measure the creative industries potential contribution to the economy.