This has, without doubt, been one of the most tumultuous years in living memory for businesses and economies globally due to the harrowing impact of Covid-19 and many people cannot wait to see its back.
By Golden Sibanda
It is expected the majority of global economies, following months of national lockdowns that disrupted economic activities and value chains, in order to contain the spread of Covid-19, will record significant negative growth this year, and Zimbabwe’s economy is not an exception.
Strong policies and measures will be required to redirect global economies back on growth trajectories with estimates showing the scars may live for years to come, but Zimbabwe appears well braced for it.
The new year will see the country begin implementation of a new, medium term policy that seeks to jumpstart an economic recovery, which has been lagging, towards the desired inclusive and transformative growth that can be felt by all.
The National Development Strategy (NDS1), provides just the perfect launch pad for a new five-year economic policy framework through to 2025, which Government believes will provide the marker for discernible recovery and sustainable growth.
NDS1 is the successor to the Transitional Stabilisation Programme (TSP), which has run its full course and has been deemed to have achieved the majority if not all targets during its two tenure.
NDS1 will build on and consolidate gains achieved under the short term stabilisation plan, running from October 2018 to December 2020, as the country trudges towards the ambitious national vision of an upper middle income country by 2030.
In October 2018, the Government adopted the TSP as its working economic document setting the tone and pace of pursuing economic reforms as it moved to stabilise the country’s economy, which has been painful but not disappointing.
One of the biggest challenges of the era prior to TSP were perennial national budget deficits and ballooning Government debts, a situation that appears well under control now.
In fact, surpluses are now a common feature of the country’s national budget while a widely endorsed debt resolution strategy or framework, for both the domestic and external debt, is now in place.
Among the major successes recorded under the short-term stabilisation plan were the elimination of the twin evils of national budget and current account deficits to manageable or sustainable levels.
In terms of national budget deficits, the Government is now recording budget surpluses, which Treasury has used to avail resources for emergencies and disasters like Cyclone Idai, drought and Covid-19.
Further, the resources mobilised from the national budget surpluses have been used to finance social protection programmes, build key infrastructure like dams, bridges and roads.
Other notable milestones realised during the tenure of the TSP included reintroduction of the domestic currency following a decade long hiatus, until February 2019.
The volatility issue has since been resolved following the introduction of the Dutch auction system, resulting in exchange rate stability, reducing inflation and improved access to forex by industry.
Finance and Economic Development Minister Mthuli Ncube is on record saying having a local currency was a major achievement during TSP, as it meant that the Government now had control of both legs for macro-economic stability in the form of fiscal and monetary policies.
During the tenure of the TSP, the Government also made massive progress investing in key enabling infrastructure such as roads, bridges, dams, power, water and sanitation among others.
Significant progress was also achieved in terms of the ease of doing business reforms, reducing imports, devolution, international re-engagement, fiscal and monetary policy reforms, restoring the rule of law.
The NDS1 targets an average growth rate of at least 5 percent annually over its five-year term and policy is supported by a solid implementation, monitoring and evaluation matrix implemented by a team in the Office of the President and Cabinet (OPC).
“This office that monitors the performance of the Government (and its line ministries/ministers) in terms of performance and targets is there, it is thriving and it works,” said Minister Ncube recently.
Permanent secretaries in ministries have already signed performance based contracts.
NDS1 policy, which will place at its core entrenchment of the devolution development concept, is premised on the adoption and swift implementation of bold strategies, policies and programmes aimed at achieving economic transformation.
Some of the specific macro-economic objectives for the five-year period of NDS1 include achieving an average annual real Gross Domestic Product (GDP) growth rate of at least five percent, maintain fiscal deficits averaging not more than three percent of the GDP or below in line with SADC target.
Further, NDS1 seeks to achieve and maintain lower single digit (annual) inflation and increase international reserves to at least six months import cover by 2023.
This will be done through the creation of a thriving private sector led competitive economy, implementation of sound macroeconomic policies anchored on fiscal discipline, monetary and financial sector stability, including an open business friendly environment, which promotes both foreign and domestic investment.
The new economic blueprint is thus themed; “Towards a Prosperous and Empowered Upper Middle Income Society by 2030”.
Zimbabwe has previously implemented several brilliant economic policies to drive growth and reduce poverty, however, the results were suboptimal due to both “exogenous and endogenous factors” and the new policy thrust is to rekindle the economy’s unrealised potential.
The long and short of it, which marks a departure from that resulted in failures of economic policies in the past, is the fact that the NDS1 is not a wish list, but a programme pregnant with realistic transformative targets implemented as annual targets through the national budget. – Herald
