Zimbabwe’s President, Emmerson Mnangagwa has set his sights on fixing the country’s economy. Khuluma Afrika has seen exclusive detailed documents which reveal the methods, strategy, and targets of the new government.
Impeccable sources told Khuluma Afrika that the document, titled “agenda for the recovery of the Zimbabwe economy”, is a summary of the direction which the country intends to take, as well as the techniques to be employed.
In his inauguration speech, Mnangagwa highlighted the need to fix Zimbabwe’s economy and alleviate dire poverty and cash constraints in the short term, while aiming to improve the standards of living and creating a comfortable environment for peace and prosperity.
The document, identifies macro-economic stability as the first item on the agenda.
“Stabilise the currency by ensuring foreign currency is made available to productive Industries in terms of the Priority List advised by RBZ, restore normal banking and foreign exchange, balance public finances and restructure and repay external and local debt. Engage support of the IMF and other institutions through a programme similar to the Lima process started in 2014.”
The agenda aims to “Review public finances by realigning pay and headcount to affordable levels, restructuring failing parastatals, eliminating subsidies, broadening the tax base, and indexing pay to retain regional parity ,provide social safety nets or transition support as necessary to facilitate buy-in to reform.”
On improving the investment climate, the government will “implement a stable, predictable, well governed, business friendly and transparent policy environment, grounded in rule of law. Place particular stress on fair competition, contracts and property rights, and proportionate and non-discriminatory regulation. Review legislation that impedes labour market flexibility or discourages formal employment. Focus on both foreign and domestic investment.”
During Mugabe’s reign, indigenisation was a hot topic that scared investors away, and was often implemented amid immense confusion. According to the document, Mnangagwa will “base economic empowerment policies primarily on investment, employment and job security rather than ownership of foreign assets, which may deter investment and harm the economy. Use conventional taxation, levies or royalties to support social programmes. As soon as possible, provide a statement of unambiguous legal obligations, but suspend implementation and hold a thorough review of policy options to develop more domestic production without deterring foreign direct investment.”
On infrastructure, the new government, will, “initiate a carefully prioritised and affordable infrastructure programme by accessing finance and technical assistance from international financial institutions following re-engagement and renormalisation of international relations. Develop capacity and encourage the adoption to undertake successful public-private joint ventures using clearly articulated legal instruments and modern project finance techniques so as to not burden state finances with the debt burdens.”
While aiming to “Systematically improve Zimbabwe’s World Bank ‘ease of doing business’ rank (in 2017, Zimbabwe is ranked at 159 of 190 countries) and commit to place Zimbabwe in the top three in Africa by 2023. Appoint a high-level ‘fixer’ with Presidential authority to deliver and eliminate inefficiency.”
Zimbabwe’s land reform which became violent in 2000 was largely responsible for the food shortages, currency runs, and massive inflation that hit the country, leading to a total collapse in 2008.
During the inauguration, Mnangagwa committed to compensating white farmers, and mentioned the need for effective land tenure. He also promised that he would not reverse the land reform program.
On land tenure, the document says, the government will, “Introduce a system of land tenure that creates “bankable” and freely transferrable property rights, such as 99 year leases. Resolve conflicts over land title by fair and lawful compensation of those who were unfairly dispossessed. Begin a consultative process as soon as possible.”
While they will, “Encourage new models of farming based on private investment, engaging farming expertise, and co-operation to secure economies of scale with the overall goal of raising farming productivity. Use the command agriculture philosophy to bring fallow or abandoned land into high productivity use but withdraw unsustainable subsidies and rely on the private sector and markets.”
And, “Increase local productivity by providing various support measures to Bona Fide local Manufacturers such as Financing ,taxation incentives and Local content rules .”
The government also intends to, “Optimise the tax regime to allow profitable businesses to thrive and pay tax, based ona larger pie rather than a larger slice or a smaller pie. Ensure total burden (tax, royalties, rents, charges etc) is not deterring business and reducing income. Ensure taxation is applied to Formal and Informal Sectors . Diversify and redistribute the tax base to rely more on households. Provide taxation incentives for new Employment and Make double taxation agreements to help foreign investment.”
While, they intend to “Invest in schools, universities, and vocational training. By offering a stable and credible political and economic environment, make it attractive for skilled diaspora or qualified foreign nationals to return and start businesses or otherwise participate in the recovering economy.”
Mining, which has become another hot issue in the country, since former President Mugabe made wild claims to the effect that $15 Billion USD in diamond revenue was missing.
The documents seen by Khuluma Afrika, state that, the government will “explore, develop and expand with transparency. Secure a greater return for the people on Zimbabwe’s natural resource endowment by underpinning property rights, ensuring risk-taking investment 29 November 2017 is rewarded and by improving the incentives for exploration and development. Improve governance and accountability through setting out on the path to joining the Extractive Industries Transparency Initiative.”
Mnangagwa, who was sworn in on Friday has promised a lean cabinet, and warned civil servants to pull up their socks. His cabinet currently consists of just two ministers, one for finance and the other for foreign affairs.
Since coming to power, the cash crisis has lessened, with black market rates for the US dollar to EcoCash falling by nearly half. Some banks have started dispensing US Dollar bills, leading to cross-rates of the bond note to USD falling.
Khuluma Afrika was told that Mnangagwa has already set the ball running on the agenda.