Zimbabwe's future looks bright

HERE is a little known (or rather; little acknowledged) fact: Zimbabwe has the 10th fastest growing economy in the world. According to IMF data, the country's real gross domestic product grew +9% in 2011, albeit from a very small base.

Not to get ahead of ourselves and mistake recovery for growth (after all, the country did witness economic contraction of biblical proportions in the past decade), it is still worth noting that outside of all the political bickering that we as Zimbabweans have become fond of bogging ourselves down into, there are certain elements within our midst that have been doing their jobs well. That is to say, there are some initiatives that several leadership bodies in Zimbabwe have been executing well on, and of course, as is always the case in any country, aspects of policy that are still wanting.

Since the inception of the Government of National Unity (GNU), we have seen the finance ministry arrest run-away inflation that had become a butt-of-jokes around the world. As part of its initial measures, the Ministry introduced foreign currencies in place of the Zimbabwean dollar which had become all but useful tender, and also did away with the disastrous quasi-fiscal policies of prior years. Though it still has its woes and remains at the bottom of the GDP barrels, the country has become somewhat fiscally sound since some of these measures were first put in place.

Not to shower the Finance Ministry with undue praise, there are still some aspects of its strategies that many may not agree with. For instance, the Ministry has in the past few years emphasised the need for foreign direct investment (FDI) in Zimbabwe.  This is not to single out its policy on this, since encouraging FDI has been a widely adopted strategy among developing nations (with some countries such as Ireland and Brazil going as far as to subsidise foreign firms in their countries), but there is no evidence to suggest that FDI necessarily generates positive spill-over in the host economy.

In fact, there is evidence to the contrary. For example, Apple Inc., a well-known U.S. multinational has aggressively outsourced many of its operations to developing countries such as China, where labour as well as other manufacturing costs are low. Now, one would think China stands to benefit from this but recent studies have shown that only about $10 or less in direct labour wages that go into an iPad or iPhone is paid to Chinese workers.

While Apple products are manufactured in China, the primary benefits go to the U.S. economy. Further still, multinationals tend to crowd domestic firms out of the market and empirical research has shown that the productivity spill-over these bring does not offset the loss in profit margins that result from a stunted local industry.

Predatory foreign firm dealings have been a thorn in Brazil's side and we should not naively follow suit to assume opening up our borders to foreign investors is necessarily a good thing. Rather, we should focus on local industry, and small local companies. Empower local business people and support these programmes rather than hope to attract foreign investors.  Export rather than import. After all, a central measure of  an economy's performance is its output and since there is no evidence to suggest Zimbabwe has the capacity to move to a consumer economy any time soon, this should be our primary focus at this stage.

Nevertheless, the focus on transparency many ministries have adopted since the GNU is also commendable. Tourism accounts for a significant share of our economy and the Tourism Ministry has been exceptional in putting Zimbabwe out there. If I may add a personal anecdote, I recall getting off a plane at Atlanta's Hartsfield Jackson airport late last year (arguably the world's busiest airport and perhaps the largest as well) only to be greeted by gigantic posters of the majestic Victoria Falls and Great Zimbabwe (at least 12 feet diagonally each).

In addition to these clever passive marketing strategies, the Ministry has also assumed an active role in putting the country's name on the global ticker, with several trips to South America and Asia helping foster bilateral relations with some of the world's fastest growing economies.

We have also seen many success stories in the private sector. An example that elicits the fondest response from some of my colleagues as a quintessential example of free enterprise in Zimbabwe is Sakunda Energy, which now controls upwards of 45% of the fuel market in the country. The company has outperformed government-run Petrotrade and National Oil Infrastructure Company of Zimbabwe (both of which spawned from the disbanded NOCZIM last January) which have gone as far as to rely on primary competitor Sakunda for supplies.

Then there is always the towering exploits of Econet Wireless, one of the most dynamic companies to ever come out of Africa, with a broad and diversified portfolio of global operations and investments.

Now, this is by no means a political piece nor is it intended as a commentary on the previous or the current Zimbabwean Government, but rather an aside to remind everyone that Zimbabweans inherently possess the ability to succeed. Aside from the political differences that we allow to vehemently detect our every interaction, I believe it is important that people take a moment to reflect on things that have been going well in our country. These glimmers of hope suggest that we are not and never will be a basket case like many would like to believe.

The idea of a people living through a stratospheric inflation rate like the one Zimbabwe reached is simply unimaginable to many. We are certainly not a defeatist people and it is this resilience under difficult circumstances that makes many of us especially proud to be Zimbabwean.

Comments