Half year review : There will be no Christmas this year

In my previous macroeconomic review, I forecast 2014 would be a dark year and for the most part I have been proven right. Businesses ( tech or not) have been subjected to indiscriminate power cuts that sometimes last up to 16 hours, a hostile legal and policy framework as well as the infamous liquidity crunch that has everyone in a vice.

On the other end we have policy makers who like to talk game, chant slogans, buy flashy cars and do little to follow up on their promises. Then there are the graft scandals where employees of government affiliated entities earned more than is justifiably moral.

Lots of Promises

Not long after the current government was elected they unveiled what they called the panacea to Zimbabwe’s problems: The Zimbabwe Agenda for Sustainable Socio-Economic Transformation (Zim Asset 2013-2018) which is reportedly an unoriginal rip-off of the Chinese Western Development Program; and indeed the strategies are uncannily similar in a lot of aspects.

The document is essentially a wishlist of the areas that the government feels are in urgent need of attention if our economy is going to improve. This includes an entire chapter dedicated to infrastructural and utility company development.

In this section the government readily acknowledges the need rehabilitate its failing infrastructure. Those of us who have had the misfortune of using a public toilet know what I am talking about.

Our railway system is in shambles: computerised booking system and modern electric trains are still to make their way to Zimbabwe and Air Zimbabwe is always complaining against foreign players who are “stealing” their customers by allowing people to book and buy tickets online.

To that end the document has promised to construct more buildings especially more hospitals (I wonder when they will commence this project if ever), construction of more dams, maintenance of existing ones, establish a National Data Centre, make improvements on the national ICT infrastructure backbone (whatever that entails, I don’t know) and roll out E-Government.

The later will include the computerisation of the National Registry Office something that had already been largely achieved by the time the ZIMASSET document was crafted so it doesn’t count as success. The e-government drive also includes the improving of IT skills of civil servants.

The problem is that this is just a wish list.

ZIMASSET accurately identifies almost all the problems that we are facing but it faces three problems:

1. it is decidedly vague in some areas. A good number of passages within the document read out like a Horoscope column. For example what does it mean when it says ” (to) carry out feasibility study for a pipeline”? Which pipeline? For what?Ethanol? Diesel/Petrol? But we already have a pipeline right?
2. Lack of funding. Unlike China which has the second largest economy in the world we do not have the financial resources to fund this wish list. A whooping $27 billion (remember we are failing to balance our $4 billion budgets) is required to finance ZIMASSET projects and I am sure that will not even be enough if we include the power generation projects mentioned in the document.
3. Lack of deadlines. At this rate they are never going to complete the projects and implement the policies by 2018

What they should be doing for the technology sector and start-ups

Instead of these pipe dreams the government and policy makers should focus on things they can change:

• Amend the Companies Act and take advantage of technology. At the moment trying to form a company is still a bureaucratic process that still takes days, requires you to visit the company registrar’s office and will cost you $150+ this explains the unusually high number of informal businesses operating in Zimbabwe. There are also no incentives for people to formalize their businesses save being taxed into oblivion.In contrast one can form a UK company for a meagre $20, on-line in about 3 minutes.
• Ease the liquidity crisis through the use of government issued coupons. Right now we have a negative inflation figure which is an indicator of depressed demand ( i.e. people are not buying as much stuff as they used to).
• Import electricity for God’s sake.
• Allow private players in the electricity generation sector. The government has clearly failed to meet public demand.
• More transparency in governance, there has been a lot of malfeasance.
• More incentives instead of creating more penalties for those who do not comply with the law, the government should try offering incentives instead to encourage compliance. For example tax holidays.
• Negotiate for more foreign funding at the Bretton Woods institutions.

What you should do to survive and thrive in this economy

•  Be very careful with you cash reserves. Always try to save as much cash as you can.
• Vet your customers carefully when offering credit sales. The number of bad debts is on the increase.
• Consider investing in other forms of energy for example Solar.
• Join the police force as a traffic cop or a parastal as a director.
• Cancel all your plans for Christmas-it’s not coming this year.

If we learnt anything from the Brazil vs Germany match on Tuesday night it is that slogans, flags, colourful caps, tears and mantras count very little when compared to efficient preparation, playing as a team,selflessness and excellent execution. Our leaders need to emulate these qualities more and be a lot less like Brazil. And no I will not be drawn to make analogies about Scolari’s age and reign!

Image Credit: Yahoo