The Sunday News
Economic Focus with Dr Bongani Ngwenya
Preamble:
THE new political dispensation in Zimbabwe offers a very fertile ground and opportunity for Zimbabwe to reform its economy.
It is now or never. I am imagining what could have happened by now if the decision for “Operation Restore Legacy” was procrastinated, even by a day.
I will leave that to the politicians as food for thought. The point I am trying to bring across here is that, I believe the state of our economy requires the same urgency and the political will that we saw being demonstrated to restore “legacy”.
Zimbabwe now requires the “operation restore economy”. I got seriously disappointed by the sentiments of the new President’s advisors, suggesting that Zimbabwe can learn from China.
In my poor command of the Queen’s language, the word “can” gives me an impression that Zimbabwe has options and alternatives. I don’t believe we do as a country. If we could be honest with ourselves, I think Zimbabwe should learn from China, and not can learn. There is no time for us and luxury to weigh our options.
There are positive developments though, in the right direction to practically deal with the scourge of corruption in the country.
I got so excited when reading that those that have externalised monies have been given a three-month moratorium or grace period to bring back the country’s monies, got so excited when listening to President Mnangagwa saying he has a list of the culprits.
If they fail to comply with the order, he is going to name and shame them. I believe it will not only end there.
As I am writing this article, I am very excited to learn that the National Economic Conduct Inspectorate (NECI) is demanding that one of the alleged economic saboteurs avails his bank statements and some tender contract documents.
It is my hope that the agency will widen its net in order to catch more economic saboteurs. The strong message of warning by the Zimbabwe National Army commander when marking the end of the “Operation Restore Legacy” and sending the army back into the barracks, sounded like very sweet music in my ears.
I hope it did the same to the ears of many Zimbabweans in the country. I don’t find it sinister at all for the military to intervene in circumstances similar to ours, especially when the law enforcement agents have gone rogue.
Economic reform now or never:
Naturally, it is very easy to destroy an economy, and re-building it rather takes time. However, the sooner we begin the better.
China’s economic reform toward a market-oriented economy began in 1978 and has been recognised as essentially successful.
The average rate of growth of real GDP in the first two decades of reform was about 9,6 percent annually according to their official statistics. What were the reasons for the reform to be introduced What were its major components?
What were the characteristics of the reform process? Why was the reform successful? What accounted for the rapid growth rate of the Chinese economy? This instalment attempts to answer these questions.
What were the reasons for the reform to be introduced in China in 1978?
If you ask politicians they will tell you that Zimbabwe and China have a similar DNA.
I have deliberately ignored the political reasons, and left them for politicians.
The major economic reason was that time had come for many economic planners to learn from experience that a planning economic system was difficult to manage.
This is witnessed by the writing of the economic officials that appeared in the late 1970s, although the understanding of the weakness of the planning economic system varied among these economic planning officials.
I am seeing a very strong and similar DNA here. The planning economic system relies too much on the inward looking perspective, which is very difficult to manage and comes in with a lot of inefficiencies.
The rapid economic growth and development that took place in the more market-oriented neighbouring economies served as examples that a market economy can perform better.
The neighbouring economies included Hong Kong, Taiwan, South Korea and Singapore. The contrasts in the economic performance between North and South Korea, between East and West Germany, and between Eastern and Western Europe reinforced this point.The Chinese people desired a market-oriented reform and were willing to support it.
The Chinese people had also suffered through the economic consequences of central planning, including the shortage of consumer goods, the limited variety and the lack of improvement in quality.
They had to kowtow to the suppliers of consumer goods and waited in long queues to get what was needed. They had to go through the “back door” (or use personal connections) to get what was considered essential consumer goods. Zimbabwe experienced similar situations.
What were its major components?
The major components of China’s economic reform were agriculture; State owned enterprises; open door-policy and corruption fighting; the pricing system; development of non-state sectors; the banking and financial sector; economic and social infrastructure; and the social welfare system.
We hope our command agricultural system would continue paying dividends. Our State owned enterprises need a complete reform.
At least Zimbabwe’s economic and social infrastructure is not completely dilapidated compared to countries like Mozambique, Angola, just to mention a few, whose infrastructure was destroyed by the wars.
What were the characteristics of the reform process?
First and foremost China made sure that it maintains political stability. I believe our own “Operation Restore Legacy” was meant to just do that. China continued learning from its past experiences, that is, doing away with policies that did not work and instituted new policies.
The slogan “to build an economic system with Chinese characteristics” was introduced in the early 1980s and remained in constant use in the early 2000s. “Chinese characteristics” meant the results of experimentation that were shown to be working for China.
This slogan also implied that the Chinese leaders were pragmatic and not confined to a set of old Communist ideology.
Why was the economic reform successful?
The competence of Chinese leaders in carrying out economic reform paid dividends.
The able leadership of Deng Xiaoping and Zhao Ziyang, premier in the 1980s, for example need not be over emphasised.
The investment in human capital that took place for a very long period and for the society as a whole.
Conclusive evidence of the value of Chinese human capital can be found in the excellent economic performance of the people with Chinese culture in many South-eastern Asian countries. Which country today does not have a Zimbabwean in its business leadership position? The basic elements of market-economy that were adopted by China facilitated its economic growth.
What accounted for the rapid growth rate of the Chinese economy?
Rapid economic growth resulted from the abundance of high-quality Chinese human capital operating in an adequate, though defective, market economy.
Three set of forces were distinctively at work that affected China’s economic growth: 1) the dynamic forces of Chinese market economy, 2) the positive role of the government in maintaining and reforming the market institutions, and 3) the institutional inertia. The combined effect of these proved to be positive.
In conclusion, may I say that, I wish you a Merry Christmas and a Happy New Year in the new Zimbabwe. Let’s give the new Government a chance and judge it according to its performance. Zimbabwe now needs an “operation restore economy”.
Dr Bongani Ngwenya is based at the University of KwaZulu-Natal as a Post-doctoral Research Fellow and can be contacted on [email protected]
