As governments make policy decisions, there are inevitable winners and losers. Public policy inherently presents trade-offs with varying implications on diverse economic stakeholders. That is the nature and reality of competitive markets. Perhaps then, the best policymakers structure policy in a manner whereby the potential gains and losses are not as disparate between eventual winners and losers. Or alternatively, policy can be structured in a way that leaves room for immediate losers to re-direct their enterprise towards gains in salvageable time. What we have seen in Zimbabwe over the past month is the strained legacy in policy communication, and how markets should ideally relate with policy makers.
By Chris Chenga
A policy maker like a Finance Minister, even a central bank Governor, can only offer guidance. Guidance is as an indication or estimate of public policy intentions pronounced by governments to market participants. For instance, a Finance Minister can hint at demonetizing a currency, or settling proprietary accounts at an official rate of 1:1 parity. This is guidance, as per formal literature such as an MPS and Fiscal Policy Statement, or guidance as per informal remarks at venues such as Chatham House. It is called guidance because while that is the signaled policy intent, it has no guarantee as economic outcomes are uncertain.
Market participants and citizens should conventionally rely on policy intermediaries to distill the various response options of which market participants can choose to act on. Policy intermediaries are professionals who lay out the various response options to governmental guidance. Intermediaries include asset managers, business analysts and consultants, journalists, investment banks, tax and legal experts, think tanks and research institutes, and many other professionals that retain their intermediary credibility by continuously proving their understanding of policy implications on market fundamentals. This very broad demographic is made up of trained, and well-versed professionals, who accumulate years of reputation to compete for the scarce trust and ear of market participants and citizens. These professionals are part of a demographic loosely referred to as the data economy, which is in the business of sharing their knowledge and insight on potential policy outcomes.
More importantly, policy intermediaries are active in setting up interphases between market participants and policy makers. For instance, when government officials travel to forums around the world, those are typically facilitated by intermediaries who would like to bring proximity between their clients and government. Consider President Mnangagwa’s invitation to Davos, or Finance Minister Ncube’s forums in New York and London. These are events which should resemble the increasing contribution by Zimbabwean professionals, world over, towards facilitating better understanding between government and active market participants or prospective investors.
What is to be emphasized here is that the Zimbabwean government is trying to transition from pariah. It has been in a prolonged and deservedly sticking era of exclusion and repudiation from potential investors and market participants. Even locally, business has been uneasy in receiving government, often reserving guests of honor seats at conferences to governmental incumbents as conformity to intimidating patronage rather than credible presence. But during this extended era, a lot of Zimbabwean intermediaries have genuinely been working hard, day and night, to give out a palatable and more literate impression of the economy, without discounting real material challenges. Within the intermediary demographic, a lot of patriotic Zimbabweans have sacrificed their own resources, intellect, career paths, and professional reputations to intermediate an acceptable impression of the Zimbabwean economy, even when it was at its most detestable state.
These intermediaries have largely been overlooked for such a very long time by a partisan government; often to the alternative of an uninformed, illiterate, and unprofessional demographic of politically backed individuals who carried no reputable conduct of engaging business – partisan opportunists. It has since been the pivot by the new administration to give greater role and reverence to intermediaries from the data economy that President Mnangagwa’s “Open for Business” narrative has been tentatively received, locally as well as globally. There has been visible traction in the right direction, but government’s reputation remains un-certified. It was regrettable then, when Minister Ncube announced a Communication Taskforce and its representation. The move was received as a step backwards, if not an intrusion of sensitive institutions such as the Ministry of Finance, which has to a respectable extent since Biti and Chinamasa, somewhat kept arm’s length from the partisan opportunism that has eroded trust in institutions. Actually, President Mnangagwa’s appointment of Ncube had been well received, as it seemed at the time a certification of partisan distancing and a renaissance of professionalism and intermediary clout in government.
So why would Minister Ncube risk erasing this internationally approved shift in Zimbabwe’s institutional recruitment and representation? Sure, it had been seen that Minister Ncube lacked the poise and expression to articulate whatever his policy intentions are in a crystallized manner to market participants and citizens. Since taking office, Ncube has been contradictory in his currency reform guidance. He has been vague in actual structural reform strategy even in a 360 page TSP. In his utterances in London, he had completely discredited the central bank already on the edge of public trust and confidence. The price instability and commodity shortage of recent weeks is simply attributable to poor policy maker signaling and guidance. Intermediaries had increasingly become necessary. Notwithstanding, many reputable and respected professionals from the intermediary demographic would have happily offered their services, and social capital, to mend the institutional respect that was drained from government for years.
Of course, political influence of a partisan nature will remain ever present in governmental institutions. It should. President Mnangagwa’s administration is a ZANU PF administration, and it is particularly beholden to a partisan citizenry which recently entrusted it with its vote. Internal political contests will inevitably emerge. That is not being contested. The problem in Minister Ncube’s recruitment is that he is seemingly bringing those underhanded political conflicts to institutions that are sensitive and could hurt the nation at large. The Communication Taskforce seemed less an appointment by a policy maker wary of the potential wins and losses to be derived by markets, as they interpret his guidance at the distillation of a credible intermediary. It appeared more of a policy maker sacrificing market and citizen confidence just to appease partisan opportunism. What it truly felt like was that the poster boy of professionalism and intermediary clout had turned his back on the institutional renaissance of which he himself was a proud representative.
This article was first published here by the Business Times (Z)