Saturday, April 06, 2013

(NEWZIMBABWE) Rethinking the Zimbabwean economy
05/04/2013 00:00:00
by Arthur Mutambara

COMMENT - Agriculture and mining are 'overrated'? More neoliberal theory. - MrK

The following is a presentation made by Deputy Prime Minister Arthur Mutambara at the Zimbabwe Investment Conference held at the Birchwood Hotel in Boxburg, South Africa, on April 3, 2013:

THERE is need to rethink the imperatives and meaning of a successful Zimbabwean economy. It is critical to understand the nature of Zimbabwe’s investment opportunities.

Zimbabwe’s investment value proposition is more than a resource boom. The key growth driver, about 50% of GDP, is now coming from consumer facing industries like retail, ICT, banking and services. Mining and agriculture are important but over-rated. Even in these traditional sectors, emphasis is on the potential impact of secondary industries driven by processing and value addition. Zimbabwe must move up the global value chains.

There is also a potential demographic dividend, i.e., converting population into economic leverage through skilled human capital. There are many well-trained and competent people in Zimbabwe, and in the Diaspora. The categorical imperatives are talent, ICT, advanced science and technology, entrepreneurship, and innovation. While infrastructure – water, energy, transportation, ICT, public works – is a key enabler of the entire economy, it also presents major opportunities to the innovative and risk-taking investor.

The Zimbabwean Diaspora must learn from other African countries like Ghana, Ethiopia, and Senegal, India, China and Israel that they can be effective sources of remittances, trade, tourism and investment advocacy; knowledge, ideas and frameworks about statecraft and economic strategies. However, there should be no taxation without representation! We as the government of Zimbabwe must adequately address the concerns of the diaspora such as voting rights, multiple citizenship, travel and national documents.

Zimbabwe’s Medium Term Policy has identified Foreign Direct Investment as a critical enabler for economic growth, with South Africa as a unique source of FDI with a hook into the rest of the BRICS economies. We must create access to financial and technical partnerships in South Africa. We seek to expose local firms interested in joint ventures with South African companies, while availing opportunities for joint venturing into export and import markets in South Africa. We desire to strengthen banking and broader financial relationships with South Africa. We seek to attract regional and international banks keen to facilitate trade and investment in Zimbabwe.

South Africa is Zimbabwe’s main trading partner, accounting for more than 60 percent of Zimbabwe’s international trade volumes. However, there is need to balance imports and exports. Zimbabwe should not be a supermarket of South African products. To avoid this, we seek SA investment in the Zimbabwean productive industries, in particular manufacturing, and beneficiation. We also seek to export more value added products to South Africa.

In executing all these investment and trade activities, South Africa and its corporates must not be driven by a charity disposition. We seek a win-win framework, where the two sister economies benefit. In any case, under globalisation regional and continental integration presents the only viable basis for survival. African countries will neither be viable nor vibrant as individual entities. They will thrive as SADC, COMESA, EAC, Magreb or the AU.

Scale, size of market, critical mass, and the pulling together of resources are now core elements of economic survival. The same philosophy applies to corporates. You will not succeed as a national company. You must have a regional, continental and global footprint. African success stories which have embraced and demonstrated this new paradigm include Econet, SAB Miller, SBSA, ABSA, Africa Sun, MTN and ABC.

For nations, globalisation demands regional and continental competitiveness rooted in regional and continental attractiveness. South Africa will not flourish with a dysfunctional Zimbabwe. SA will not thrive with an economically-crippled Malawi. SADC countries will swim or sink together.

South Africa will only be a meaningful member of the BRICS if it is there representing SADC and Africa. SA’s metrics, of a GDP of US$408 billion and a population of 51 million people, do NOT qualify it as a legitimate member of the BRICS when you compare with Brazil (US$2,493bn), Russia (US$1,850bn), India (US$1,676bn), and China (US$7,298bn). The SA numbers are chicken change in comparison with each one of the other BRICS. The collective GDPs and populations of SADC, COMESA and the AU will allow SA to have more leverage and clout in the BRICS, thus benefiting SA, the regional bodies and the entire African continent. This should be the new strategic approach.

Yes there are problems and challenges in Zimbabwe – poor infrastructure, low access to financial services, food security matters, governance, low productivity, low beneficiation – but these must be seen as potential opportunities by discerning and creative entrepreneurs, investors and traders. We need possibility thinking as a new framework. Business players must be possibility thinkers who solve human needs and challenges by viewing them as business opportunities.

Every challenge presents an opportunity. We just need to be innovative and creative enough to convert adversity into a business value proposition. Risk aversion underpinned and driven by incompetent risk modeling and over-pricing of risk factors must be discouraged.

Of course, foundational to all this, is the role of the Zimbabwean government. It has a duty and obligation to create a conducive and enabling economic environment and business climate. In particular, there is need for certainty, predictability, respect for the rule of law, and provision of an enabling policy framework that encourages and facilitates trade, investment, entrepreneurship and technology uptake all rooted in regional and continental integration within the context of SADC, COMESA, the AU, the BRICS, and the global economy.

These are some of the issues we must discuss and asses as we rethink the imperatives and meaning of a successful Zimbabwean economy. In doing so, we must be driven by 21st century Pan-Africanism rooted in entrepreneurship, science and technology, ICTs, and collective economics. Within this context, no African will be respected or deserve any recognition, unless and until the entire African continent is prosperous. The South Africans must understand this. No Zimbabwean will be respected, or warrant any attention unless and until the Zimbabwean economy is thriving. The Zimbabwean Diaspora must come to terms with this.

The struggle continues, but we shall overcome.

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