Thu Oct 27 09:06:12 SAST 2016

kick-starting zim

By unknown | Aug 17, 2009 | COMMENTS [ 0 ]

Q&A with Welshman Ncube, Zimbabwe trade minister, by Thandeka Gqubule

Q&A with Welshman Ncube, Zimbabwe trade minister, by Thandeka Gqubule

Q: How are the efforts at stabilising the Zimbabwean economy going?

A: We need to arrest economic collapse and put an end to our decline as a people.

From February we chose a package of reforms aimed at restoring trust, credibility and confidence in the Zimbabwean economy.

The efforts emphasised the normalisation of monetary policy, restoration of the productive capacity, some liberalisation, the reform of key institutions and gaining foreign financial support for stabilisation.

If there has been one key lesson we have learnt over this period - it is that we Zimbabweans are on our own.

Few of Zimbabwe's former allies turned out to have our interests at heart. Their agendas involved us delivering President Mugabe's head on a platter in exchange for support.

Q: In his own words, Prime Minister Morgan Tsvangirai set out to beg and borrow. The past months have seen him trying to raise Western financial support for the stabilisation effort. Are you saying these efforts were largely unsuccessful?

A: The chronic lack of external support is likely to continue. We however can't allow this to threaten stabilisation efforts and have to innovate and use a good monetary, industrial and trade policy to navigate our way out of the crisis.

We have not received any direct budget support, nor have we received any infrastructure support or aid with our balance of payment challenges.

Assistance has thus far been humanitarian aid to the NGO sector. While this will assist us to alleviate the humanitarian crisis, it leaves us with serious challenges in terms of macro-economic stabilisation.

Q: How key is monetary policy to stabilisation? Has the issue of the adoption of the rand been resolved?

A: Monetary policy is central to the stabilisation efforts. Briefly, the key to containing runaway inflation is a healthy productive sector. The staggering decline of this sector means we do not have the productive capacity to support a local currency.

The new government introduced a multiple currency system. Ordinary Zimbabweans had already tossed over the system of legal tenure in Zim dollars and even street traders were no longer prepared to take the Zim dollar.

In the south the rand was the operative currency, while in the west near Botswana the pula held sway. To the north, the region had dollarised.

There were pockets of use of sterling in the main cities. To protect themselves against rampant inflation, Zimbabweans traded in these currencies. This dispensation ends officially on December 31.

Our minister of finance Tendai Biti has been mandated by Cabinet to present a paper on the issue - after which a debate must ensure that we all agree on the way forward.

I believe it would unravel the few successes of the stabilisation effort if we returned to the Zim dollar.

I think we should join the SA Monetary Union to achieve a dispensation akin to that of Swaziland and Lesotho where their currencies are pegged tightly to the rand. This would ensure that credibility is restored and that capital inflows could rise.

Q: What of the Reserve Bank?

A: The Bank has lost all the normal functions of a Reserve Bank. It does not sit on any forward cover, as we are living from hand to mouth. It has no autonomy and needs to be depoliticised. Clearly, a new day is in order.

Q: Can we talk about the controversial industries - tobacco, diamonds, platinum and gold.

A: As we will need to increase local production, and tighten up on practices in these industries, it will be like starting all over.

The conditions in our mines are now so backward - pre-industrial.

Central to our industrialisation policies is the challenge of catching up.

We need to re-mechanise and beneficiate - add value to our products and minerals and thus found new downstream industries.

While we will be liberalising in sectors like telecoms and others in which the state has a major footprint - we'll also look at ways that the state can transform these industries.

We will have to trade our way out of this crisis and this will make us more reliant on our own resources.


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