Mthuli Ncube, Minister of Finance and Economic Development of Zimbabwe speaking during the Session “The Debt Time Bomb ” in “Issue Briefing Room” at the Annual Meeting 2019 of the World Economic Forum in Davos, January 23, 2018.
Copyright by World Economic Forum / Greg Beadle
Zimbabwe’s economy will overcome the numerous hurdles which lay before us on the path towards prosperity. These obstacles are patent, and in some cases potent. But with hard work, proper planning, and monetary and fiscal discipline, Zimbabwe will get out of the current economic rut.
Some of these challenges are out of our control. Take Cyclone Idai in March of last year for example. The extreme weather phenomenon destroyed lives and livelihoods. This meteorological mess was followed by another, as drought struck across our lands. Food output has thus been severely hampered by these outside forces; and we have been left with no choice but to subsidise, import and rely on help from the international community to avoid total crisis. While there were some real achievements in 2019, including a balanced budget for the first time in living memory, we have a commitment to subsidise where necessary to make sure our nation is fed.
As we move into 2020, we will continue to learn from these “unknown unknowns”. We are already investing in ‘climate proofing’ our agriculture, including new irrigation techniques, and drought resistant crops. We must now double up our efforts with our international partners – new and old – to protect our agriculture and food supply.
As we look forward to growing our economy, it is incumbent upon us to rein in inflation as quickly as possible. This is crucial for investment. This is vital for job creation. Month on month inflation is already stabilising, down to approximately 16%. Of course, annual inflation remains high. We do not hide this, nor was this unexpected. That is what happens when you liberalise a currency. But this process of reforms is a long-term necessity for our economy.
We are taking steps to prop up the currency, drip-feeding in cash injections in a non-inflationary manner. This has involved exchanging electronic currency for the physical currency. We will also be introducing higher denomination notes over the course of 2020 to make it easier for citizens to transact. We know the current environment is tough. But Zimbabwe’s economy needs tough reforms, not superficial ones.
In the current environment, both wages and purchasing power have taken a big hit. Government therefore has a responsibility to support consumers and the private sector as a whole. As part of the currency reform agenda, we have had inevitable wage compression. This is part of the liberalisation process. We have responded by propping up the wages of the civil servants, and we hope the private sector acts in kind. Dollarisation inertia unfortunately means that retailers are still pricing in USD and simply translating it to the local currency. This is squashing the purchasing power of current wages. We are closing that gap by allowing wages to rise.
In order to finance these moves and reboot the Zimbabwean economy as a whole, it is crucial to reform state-owned companies. We have already passed the first hurdle, which was to decide which ones should be partially privatised, which ones should be liquidated, and which ones should be departmentalised, and of course to highlight those which should not be touched. 2020 is now about implementing and enacting these moves. We will advance the partial privatisation of the telecom company (Netone) and motor-vehicle assembly company (Willovale Mazda Motor Industries), capitalise our Silo Foods Industries, privatise banking assets and more. We want to have a private sector-led economy in Zimbabwe. And for the private sector to lead, we must privatise!
Despite all the hurdles and all the barriers, Zimbabwe in 2019 leapt 15 places in the Global Ease of Doing Business rankings. As we look to improve this in 2020, privatisation is a big part of this story.
For the first time in living memory, Zimbabwe achieved a balanced budget. We have our fiscal and monetary fate in our own hands. We have a talented, educated and devoted workforce, ready to get to work. And we have natural resources a-plenty, ready to drive our economy forward. The Zimbabwean future is, therefore, an exciting one. With patience and discipline, we will overcome all the hurdles that lay in our path and build a better future for all.
Post published in: Business