ZIM-ASSET: A SOUND AGENDA BUT SHORT ON STRATEGY AND IMPLEMENTATION PLAN
The Zimbabwe Spring of Inclusive Government (2009-2012) formally came to an end with the elections of July 2013, although it had effectively petered out and stopped by the end of 2012 as politicians turned their attention from the economy to preparing for elections. The promise of reforms contained in the Global Political Agreement (GPA) had by 2012 fizzled out in the midst of endless policy disagreements between the parties to the Inclusive Government, and the general mood was that a government to tackle the deep-rooted problems in the economy needed a fresh and clear mandate from the population. Figuratively, the nation therefore held its breath as it went to the polls in 2013; with all the signs there that Spring was over for the economy, but few could say what would follow.
Consistent with its dominant ideology of national liberation, ZANU(PF)’s 2013 election manifesto underpinned its economic development program on a promise to Indigenize, Empower, Develop and Create Employment. It promised that a ZANU(PF) Government would indigenize 1,138 firms –90% of them in the mining, manufacturing, and tourism sectors – by using the 2007 law to transfer 51% ownership of these businesses to indigenous Zimbabweans; in the same way that 12.1 million hectares of land had been transferred from 3,500 whites to Africans - much of it given to 276,000 indigenous households. While the promise of land redistribution was based on available land, the promise of indigenization was made in an environment where most companies had either closed down, or were operating at low capacity. Some analysts therefore hypothesized that the many coffee shops and lodges springing up around the urban areas (often run by displaced white farmers) and retail spaces owned by foreigners were included in the companies to be indigenized given the desperate conditions of industries.
After ZANU(PF) had won the July 2013 elections, government announced the Zimbabwe Agenda for Sustainable Socio-Economic Transformation (ZimAsset), for the period October 2013 to December 2018, as the instrument to turn the party manifesto into an economic development program. While the Short-Term Economic Recovery Programs (STERP) I and II during the Inclusive Government had been developed under the Ministry of Finance, ZimAsset saw economic policy-making reverting to ZANU(PF) - as had been the practice before 2009 - and it was approved by the Politburo for implementation under the joint leadership of Ministry of Finance and the Office of the President and Cabinet. ZimAsset outlined four priority areas (Clusters): food security and nutrition, social services and poverty eradication, infrastructure and utilities, and value addition and beneficiation.
In order to empower, the manifesto promised to use natural resources to unlock value for indigenous businesses in twelve sectors, where 1,238 of the companies to be indigenized were reportedly worth US$7.3bn; and then unlock a further US$1.8 trillion from local authorities, parastatals, mines and other assets. With manufacturing companies operating at around 40% of their capacity (many unable to pay wages to their employees for months), and practically all local authorities and parastatals deeply in debt, it was not clear how the manifesto writers computed these numbers
For greater economic development, the manifesto promised to allocate Agribank US$2bn to stimulate agricultural production; to capacitate IDBZ with US$3bn to finance physical infrastructure development; to use US$2bn to rehabilitate social infrastructure (schools, clinics, etc.); and to give SEDCO US$300m to finance women’s and youth initiatives. It appeared from a reading of the manifesto that these proposals were based on value to be unlocked from indigenized firms, but it was not clear how the indigenized shares would be turned into monetary value to finance the recapitalization of these three major parastatals.
Finally, to create employment, the manifesto promised 2.265 million new jobs over five years, half of them in the agriculture and tourism sectors, and the rest in manufacturing, electricity generation, construction, finance, and the public services of health and education. Having instructed utilities responsible for power and water services to write off uncollected revenue in the run-up to elections; and with tourists having long deserted Zimbabwe, and agricultural financing from banks not viable without bankable tenure instruments, it was not clear how these new jobs were going to be created.
The manifesto promise was that these strategies would drive recovery, and the economy would register an average annual growth rate of 9% by 2018, starting with a low 4% growth in 2014. This would see Zimbabwe’s economy double in eight years, and would indeed constitute a Summer of Rapid Growth. The promises and realities on the ground led many readers of the manifesto to consider it ambitious but unrealistic, and this might explain why the nation was curious, anxious, and expectant about what was to follow after 2013.
In order to deliver the promised growth, ZimAsset contained four critical policy commitments: to maintain a multi-currency system for the foreseeable future, to introduce Special Economic Zones, especially in urban areas, to review the indigenization framework, and to focus on the rehabilitation of industry, agriculture, and mining. It further made commitments to resolve any outstanding land issues and pave the way for expanded irrigation programs to underpin agricultural recovery, while remaining on course with government programs being monitored by staff of the IMF. To finance ZimAsset (estimated to require US$27bn), seven sources of funding were identified: tax and non-tax revenue, leveraging resources, a Sovereign Wealth Fund, issuance of bonds, implementation of Public Private Partnerships (PPPs), securitization of remittances, and mobilization o f resources from the BRICS (Brazil, Russia, India, China and South Africa) countries. With government revenue projected at around US$4bn in 2013 and over three-quarters of it set aside for civil service wages, the capital funding of ZimAsset would require at least an additional US$5bn from external sources (exports, FDI, or ODA).
ZimAsset outlined a program on how government would tackle obstacles standing in the way of economic recovery if a Summer of Rapid Growth was to follow the Spring of Inclusive Government. On the creation of conditions enabling businesses to thrive, ZimAsset was silent and instead focused on state-driven measures as drivers for economic recovery. Similarly, the state was going to be the primary actor in dealing with issues of natural resources management in order to attain the projected economic growth. Thus, the mechanisms of how ZimAsset could herald the coming of a Summer of Rapid Growth were either vague or not covered at all. A good strategy is normally based on the best fit between an organization and the environment the organization operates in: telling us not just "what" will done (the agenda), but how it will be done. Without a detailed strategy (covering short, medium and long term horizons), ZimAsset did not present a clear understanding of the prevailing environment (local and international) so necessary to underpin the viability of any strategy; and therefore failed to produce a sound strategy that could link the prevailing environment with the organization of Government and private agencies.
ZimAsset laid out an expansive program, with more than 80 Cluster Key Results Areas, 150 Cluster Outcomes, 350 Cluster Outputs, and 350 Strategies. Although it recognized that implementation would be hampered by a lack of adequate resources, and would require robust and prudent fiscal and monetary policy measures, it did not provide a framework for prioritization. Furthermore, without a detailed breakdown of inputs (materials and finance) needed to produce the 350 Cluster Outputs, ZimAsset did not produce viable detailed implementation plans with timelines and schedules of producing these Outputs. Without detailed Inputs matched with Outputs, ZimAsset strategy could not link a poorly understood environment with existing national systems, organization, and resources so necessary for success. Without detailed and specific activities, resources (human and finance) needed, and targets (time when outputs would be delivered by); a Zim-Asset fell short of an Implementation Plan.
It can be argued that during the Winter of Fast Track Policies (2000-2008), the economy built by the Rhodesian Front in the period 1965-1980 was destroyed. It can also be argued that by pursuing Fast Track Policies, the ZANU(PF) government hit a ‘re-set’ button – taking Zimbabwe back to the early 1960s before the Unilateral Declaration of Independence (UDI). Unlike countries that set out to build a new economy with very little in the 1960s, Zimbabwe in 2013 found itself with an infrastructure and human resource base that it had inherited and expanded after 1980. Secondly, regional geography had changed, with a post-apartheid Southern Africa with enormous opportunities for growth. Thirdly, a rapid growth of technologies in the world had created opportunities for countries to leapfrog and bypass stages of development that relied on older and more cumbersome technologies. These were just three elements available to those thinking about long-term prospects for Zimbabwe’s recovery and growth. The Summer of Inclusive Government set the conditions for a takeoff in economic recovery; what remained for its leadership was to figure out how Zimbabwe could successfully use these opportunities.
The first step towards economic recovery was to incorporate sound policies into the national development strategy (in this caseZim Asset) and specifically address the key obstacles to attracting investments, whether from individuals, corporations, or states. In the case of Zimbabwe, a Growth Enhancing Property Rights Framework (GEPRiF) – in its approach, content, enforceability, predictability, consistency, and credibility – lies at the heart of what a sound economic recovery program should tackle in order to improve services to the population. The adoption of a GEPRiF would be a sign that economic policy-making in Zimbabwe is no longer hostage to political veto, and give momentum to the adoption of a sound economic recovery program incorporating government policies on prudent budget management with a balanced budget (the debt of close to US$9bn in 2012 was mostly arrears accumulated since 2000 when the country defaulted on its external loan repayments while increasing domestic borrowing). Prudent budget management with a focus on service delivery to the poor would open the way for Zimbabwe to engage international creditors (especially the IFIs and traditional Paris Club members) in order to develop a viable debt clearance strategy – including repayments, write-offs, rescheduling, and other options pursued by countries in similar and sometimes worse circumstances than Zimbabwe’s.
The conditions for economic recovery in Zimbabwe exist, subject to the rebalancing of technical and political considerations in policy formulation and implementation. With its stock of natural resources and a well-educated population, Zimbabwe has advantages that many countries did not have at independence, or when they re-set the clock for economic recovery and growth. In addition, the people of Zimbabwe are highly mobile in Southern Africa, with an estimate of nearly 25% of the population having emigrated in the last two decades, mainly to South Africa, and with a reputation for hard work and trading skills in the region (three-quarters of the adult population inside the country are also engaged in some form of trade activity). Added to this extensive distribution of its population around the world, the country has opted to maintain a multi-currency system dominated by the US$ which gives Zimbabweans a great opportunity to take advantage of global commercial opportunities if the country can re-establish domestic production systems. For this to happen, Zimbabweans need to accept that the War of Economic Liberation - fought over land and indigenization - during a decade of Fast Track Policies is over; and that the Spring of Inclusive Government has presented the country with a platform on which a transition to a of Summer of Rapid Growth can start under conditions of new political and economic freedoms that were unimaginable in 2008.
 The IMF Staff Monitored Program (SMP) focuses on improving transparency in the mining sector (revision of Mining and Minerals Act, and preparation of a new Diamond Policy and Act), addressing vulnerabilities in the banking sector, improving government payroll management, and ensuring minimum funding of social services.