By Tirivanhu Kateera
The Transitional Stabilisation Programme (TSP): 2018-2020, which focused on, inter-alia, stabilising the macro-economy and the financial sector, and thus laid the foundation required for economic growth has come, conquered and will be exiting end of December.
It is important to note that at this point, the TSP is leaving an indelible mark of monumental success in the country’s history in recent years.
The TSP was introduced at a time when the economy was basically malfunctioning, the exchange rate was running amok, fluctuating nearly every day, goods and services had a three tier pricing system; most goods on the shelves were imports; fuel was in short supply with queues being the order of the day, there was no local currency and other man-made challenges.
Most of these challenges were due to the old-dispensation’s failure to deal with corruption, implement reforms, manage the economy well and stamp out cronyism within Government corridors.
The TSP, despite serious odds such as natural disasters (droughts, floods, Cyclone Idai), COVID-19 pandemic, illegal sanctions and international isolation, achieved its objectives that were mainly to stabilise the economy, and lay a strong foundation for economic growth currently being witnessed in the country by those who are able to give credit where its due.
Kudos to the political will, dedication and zero tolerance to corruption by the New Dispensation; the TSP’s registered innumerable successes. The achievements include, but not limited to stabilization of the exchange rate, stabilization of the prices of goods and services, introduction of the foreign currency auction system, lowering the inflation rate, introduction of the local currency, budget surplus which reached $1,2 billion by June 2020, improved fuel availability and cutting the public service wage bill from 92 to 50 percent of national budget.
The exchange rate stabilised, after it increased from $25 to US$1 to around $83 to US$1, where it has remained for the better part of July, August, September and October.
The premium on the parallel and official exchange rates has significantly narrowed from a peak of 300 percent on 22 June 2020 to the current 26.4 percent.
Annual inflation is projected to close the year at around 50 percent, consistent with reducing the month-on-month inflation from 31.7 percent in June 2020 to less than 5 percent by the last quarter of the current year.
Another success is on the legal front where the Devolution Policy is being implemented religiously. Through devolution funds, roads (Beitbridge-Harare-Chirundu, Binga-Karoi), schools, clinics, bridges and other capital projects have been completed, while others are at various stages of implementation around the country.
Under devolution, in 2019, $657 million was disbursed and this is expected to increase to $2.9 billion in 2020.
Alignment of laws to the Constitution is almost complete and by end March 2020, 144 laws had been amended out of 183 that needed to be aligned to the Constitution. Efforts are underway to work on the remaining 39.
The ease of doing business improved significantly, which have culminated in the establishment of a one stop shop investment centre, which is now operational.
This has seen Zimbabwe’s 2020 World Bank’s Ease of Doing Business ranking improving to 140 from the previous position of 155, meaning it has improved by 15 positions.
In a nutshell, the TSP managed to lay a robust foundation for economic growth which made it practical and sustainable for Government to launch a new attainable five-year economic development plan, which is targeting a Gross Domestic Product (GDP) growth rate of five percent a year up to 2025, which will propel the country to an upper middle income economy by 2030. Otherwise known as Vision 2030, this is the Government’s target in the long run.
Dubbed the National Development Strategy 1 (NDS1) and running from 2021 to 2025, the plan is the successor to the TSP.
NDS1 will be running under the theme, “Towards a prosperous and empowered upper middle income society by 2030.”
The NDS1 will be rolled out under better economic conditions than the TSP and carries with it bold strategies and policies to hurl economic growth in line with the Vision 2030.
The Devolution Policy will also play a critical role in scaffolding the NDS1 to achieve set targets.
Through the implementation of NDS1, inclusive development, an improved quality of life for the people and shared prosperity are some of the expected outcomes or deliverables to bench mark the success of the policy.
Agriculture, mining, electricity and manufacturing will be the major drivers of growth under the NDS1, as they are and remain the major pillars of the Zimbabwean economy.
Other top objectives under the new economic blueprint include maintaining fiscal at no more than three percent of GDP, achieve and maintain single digit inflation, increase international reserves to at least six months import cover, maintain domestic and external debt at below 70 percent of GDP and a current account balance of minus three (-3%) of GDP.
During the five year period, government is also aiming to create 760 000 formal jobs as well as accelerate value addition in the agriculture and mining sectors.
This will guarantee a growth in the country’s export receipts bringing the much needed foreign currency as well as creating more jobs.
With the current zeal and dedication by the New Dispensation to re-engage with erstwhile enemies in the global community, fight corruption, maximum support to various sectors of the economy such as agriculture and mining, foreign currency auction system, US dollar denominated stock exchange (Victoria Falls Stock Exchange), removal of deadwood from Government and crafting of practical economic blue print, like its predecessor, the NDS1 is poised to succeed.
However, it’s critical that Zimbabweans own and support the NDS 1, as a homegrown solution meant to address the country’s economic challenges.