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MDC response to RBZ Monetary Policy
Movement for Democratic Change (MDC)
July 31, 2006

The statement by the RBZ governor is a welcome document of imaginative and innovative monetary initiatives. We congratulate the central bank team for their hard work and creativity. However, the context and environment in which these ideas are raised is poisoned and dysfunctional rendering them ineffective. Furthermore the statement addressed symptoms and not causes of the Zimbabwean economic crisis. The macro-economic fundamentals were essentially not addressed. In addition, the remedies offered were neither long term nor sustainable.

The Zimbabwean economic meltdown is rooted in a crisis of political governance and legitimacy. The crisis has lead to the total collapse of the organization and management of our national economy which has led to the acute inability to deliver basic public and social services. In addition, Zimbabwe has become a globally isolated pariah and failed state with a debilitating impact on the performance of business enterprises and public institutions. Any macroeconomic initiative that does not address the totality of these foundational issues is meaningless and irresponsible. Thus the RBZ missed an opportunity to begin a national debate on the causes of the Zimbabwean economic crisis.

The RBZ governor’s obsession with sanctions as a cause of our economic challenges should be rejected with the contempt that it deserves. The biggest imposer of sanctions on Zimbabwe is the ZANU(PF) government; through misrule, dictatorship, inept economic policies, misguided foreign policy, corruption, and sheer incompetence. These sanctions must be lifted first before we ask other nations to lift measures that they have imposed on us. The statement should have clearly identified government incompetence, mismanagement, lack of economic vision and capacity as major causes of the economic crisis. Instead it dwelt on secondary and symptomatic issues, while shielding the regime.

A major flaw of the monetary policy is a single variable approach to economic analysis. Inflation is separately identified as enemy number one, corruption as the second one. Other cancers are disjointedly identified as currency devaluation, exchange rate instability, poor agrarian productivity, and lack of investment. Monetary policy frameworks are then developed separately for each area. This is completely unsound and ineffective. These economic variables are interconnected and inter-dependent. What is required is a multi-variable economic analysis and policy formulation that take into account the inter-connectedness of these different issues.

While we appreciate the objective of removing the three zeros in the currency, to celebrate this policy as a "zeros to hero" project is in extreme bad taste. There is nothing to celebrate. Zimbabwe is a failed state, and this policy seeks to tinker with the periphery of a national disaster. We reject any attempts to create false hope, and buy more time for the Zimbabwean dictatorship. While we appreciate the efforts to protect the value of the Zimbabwean currency, we are apprehensive about the use of ZANU(PF) youths to guard Zimbabwean borders. Illegitimate tools of repression cannot be used in pursuit of any positive national effort. Even the extensive use of our police and armed forces in all these initiatives smacks of the militarization of our society that has become the hallmark of this ZANU(PF) dictatorship. There has to be another way.

Zimbabweans should not be hoodwinked into believing that the RBZ statement represents any hope and salvation. At best it buys the corrupt and incompetent ZANU(PF) government some reprieve. However, the revolution is coming. The people of Zimbabwe will not accept anything short of total political and economic liberation.

The Way Forward
The way forward for Zimbabwe requires more players than the RBZ. In fact, an inclusive, all stakeholder approach is required. Zimbabweans must address the foundational issues of institution building, and deepening of democratic values and principles in all sectors of our society. We need to develop and live a new democratic culture. This will create the basis for sustainable change that has both form and substance. A new, people-driven democratic constitution is a critical pre-requisite to set the national terms of reference. The process of making that constitution must give confidence to all Zimbabweans that the outcome will reflect their will. A contested document is no foundation for stable governance. Key elements of this constitution should include; effective and functional separation of powers, executive accountability to the legislature, entrenched independence of the judiciary, a fair and transparent electoral framework, strong and effective protection of fundamental freedoms, liberties and human rights, ensuring institutional capacity for such protection.

We need to stop the economic decline and the suffering of millions of families in our country. The starting point is developing an economic recovery and a stabilization program. A holistic approach that involves all stakeholders and takes into account all economic factors must be the basis of a multi-variable economic model for Zimbabwe’s survival. There is also need for economic structural reform, underpinned by economic transformation that involves integration and coordination of the informal and formal sectors. There is also need for effective macro-economic policy coordination that systemically links monetary and fiscal policies. The NEDPP is completely inadequate, ill conceived and does not present a meaningful starting point.

Honest assessment of our current predicament and taking ownership of our challenges will be the starting point. The ZANU(PF) regime is in self-denial and does not appreciate the extent of our problems.

There is need to develop a medium term economic stabilization strategy which will focus on fiscal discipline, poverty alleviation, viable social security programs such as housing, healthcare, education, job creation, infrastructural rehabilitation, and local authorities capacity building.

Zimbabwe needs a National Economic Vision and a National Economic Strategy. Where do we want the Zimbabwe economy to be in 20 years? What are we going to do, in order take Zimbabwe to this destination economy? Beyond recovery and survival we need to develop long term strategic initiatives, with sector specific programs, that enable Zimbabwe to emerge as an industrialized, technology driven, competitive nation, fully integrated into the global economy. We should use the existing capacity of Zimbabweans and their natural resources to compete through the design and construction of new and innovative products on the world market. While building upon our national core competencies such as agriculture, mining and tourism, emphasis should be on focused manufacturing and leveraging new technologies. Some of these new technology platforms are cheaper and lend themselves better to countries with poor infrastructure than advanced countries. Hence, there is a unique opportunity for Zimbabwe to run where others walked. We can thus, leap-frog from the current economic crisis into the globally competitive and knowledge-based economy. Zimbabwe needs an effective science and technology strategy, rooted in regional integration and linked to forces of globalization.

There is need to implement investor confidence building measures in order to increase trade and investment. Of paramount importance is the respect for property rights, rule of law, predictability and certainty of laws, and consistency in the application of regulations. The economic strategy should then be driven by extensive domestic investment (local and Diaspora), foreign direct investment (FDI), processed exports, value adding economic activities, business growth, and economic empowerment. There is need to engage our strategic partners in Africa, Europe, Asia and the Americas for investment, partnerships and global outsourcing opportunities. Under globalization there is no country that can thrive without dealing with the international community including the multilateral institutions such as the IMF and World Bank. We know that historically, these two specific institutions have espoused anti-African and anti-poor people policies. What is critical is to engage these institutions with the view to extract favourable arrangements for our country. In the current global economy, the IMF is ostensibly a gatekeeper. If they are not involved with your country, there is no investment and trade that will occur there. We cannot go it alone.

We need to engage everyone in the world community of nations. This misguided and bankrupt Look East Policy must be rejected with the contempt that it deserves. How can we look East when the East is looking West? The Chinese, Singaporean, Malaysian, and Japanese economies are heavily dependent on, and linked to, the USA and European economies. Zimbabwe needs strategic thinkers who look everywhere for opportunities, not unimaginative despots typical of failed and pariah States who seek economic opportunities from one geographical location, out of desperation and lack of choice.

Zimbabwe’s resource base and human capital (local and Diaspora) must be mobilized and leveraged to benefit Zimbabweans. With a deliberate strategy of beneficiation (value adding economic activities) we should build new factories, create economic opportunities and attract investors for further development. All our minerals must be processed locally and exported as refined products. For example we need to build refinery plants and secondary industries for our platinum, gold, and copper. In most developing economies, remittances from, and economic involvement of the Diaspora have become key strategic initiatives. We should seek to ensure that our fellow citizens in the Diaspora have a meaningful role to play in the development of their country by leveraging their remittances, expertise and networks. However, there is no taxation without representation. We must allow people in the Diaspora to vote in all national elections.

Our country is uniquely endowed with natural wonders such as the awesome Victoria Falls and the majestic Great Zimbabwe. As we return to the international fold there is need to drive, optimize, and leverage the tourism sector. We should make our currency valuable again, reduce the cost of living for the suffering families and stop corruption and misuse of money. We need radical transformation to good governance with able and efficient government at all levels in both the private and public sectors. We should bring stability and prosperity to our country, which has been lost in the years of decline and economic collapse.

We should ensure a fair, secure and effective use of land with new strategies that will make the land green again. What is required is a democratic and participatory framework that seeks to achieve equitable, transparent, just, and economically efficient distribution and use of land. This must have emphasis on productivity, food security and self-sufficiency. Collateral value of land must be guaranteed by establishing security of tenure through the provision of title or 99 year leases. Land should never be used as an instrument of political patronage. With an effective land revolution in Zimbabwe land owners should be motivated towards beneficiation where emphasis is placed on secondary agriculture. Under this philosophy, we should encourage exporting processed agricultural products and not raw materials. For example; Export clothes not cotton, tinned vegetables not raw vegetables, flour not wheat, and furniture not timber. Instead of selling raw materials we should sell value added or finished products. This will facilitate entrepreneurship, job creation, and thus ensure income for Zimbabwean families and guarantee prosperity and food security for all.

In all these economic strategic initiatives, the underpinning and central organizing values should be fiscal discipline, productivity, efficiency, innovation, creativity, beneficiation and excellence.

This Zimbabwean economic mandate requires generational intervention. History will never forgive give us if we do not step up to the plate, and rise to the challenge. We must reclaim our rights, be masters of our own destiny, and be the change we seek in our country. 

Arthur G.O. Mutambara
MDC President

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