FIX THE ECONOMY – HIGHLIGHTS OF THE CCC ALTERNATIVE
The illegal and grossly irrational economic measures announced by Mr Mnangagwa on 7 May 2022 point to an economy that has imploded.
As the alternative and a government-in-waiting, we wish to put forward an alternative CCC economic policy approach which will solve the nation’s economic crisis at its root.
Rethinking the economy
The CCC will offer a break from the present predatory order and a bridge that will accelerate the transformation and make Zimbabwe a stable, democratic and development-focused, modern nation.
We will reshape Zimbabwe through the creation of a shared vision and a sustainable transitional framework that will be the foundation of transforming the structure of our economy, eliminating poverty and enabling the pursuit of sustained, equitable and shared growth.
The new economic framework will be underpinned by a new governance culture and the creation of a consensus state.
Core features of the new governance culture will include respect for the rule of law and constitutionalism, building strong, independent institutions, devolution and equal development, the creation of a rights-based society, eliminating corruption, infrastructure transformation and the development and urbanization of rural areas.
The social contract between the state and citizens in Zimbabwe has broken down.
There is a lack of confidence or trust in the State, government and public institutions.
The lack of confidence finds expression in the thriving parallel market, acute hyperinflation which officially stands at 96% year on year, although economic experts have said it is much higher, in the region of 265%.
This is partly because the State and its institutions are corrupt and inefficient.
The lack of confidence and trust in the State and the failure of the State to meet its social obligations to the citizens has resulted in the majority of citizens operating outside the ambit of the State.
Poverty has compounded these problems. The World Bank reports that 49% of the Zimbabwean population lives in extreme poverty.
A CCC government will restore confidence in the government through ethical leadership, the creation of a consensus state where there is wide consultation with key stakeholders before policies are created or changed, the building of a shared and inclusive society and the creation of an economic environment that promotes opportunities for widespread prosperity, especially for the ordinary citizen.
Anchoring the economy on the democratic developmental state model
In addressing the economic challenges faced by Zimbabwe, the CCC accepts that tough decisions will have to be made.
In this regard, the ability of our Government to widely consult and negotiate with local partners will be key.
We will build the capacities of strategic state entities to ensure that they can effectively implement economic policies.
As we have learnt from other successful developmental models e.g. Estonia, we recognize that policy trade-offs will be essential.
Pillars of CCC economic framework
Under a CCC government, the economy will be anchored on macro-economic stability, fiscal discipline, resolution of the debt crisis, financial service sector reform, pension reform and social protection, currency reform, industrialization and alteration of the accumulation model, rationalization of the land reform program including securing land tenure for those who hold agricultural land, agro-industrial transformation, mining sector reform including beneficiation, job creation and formalization of the economy.
Zimbabwe Emergency Economic Rescue Program
Since the end of the GNU in August 2013, Zanu PF has pushed the economy into a state of disequilibrium and dislocation through ballooning debt, fiscal deficits, rampant and uncontrollable expenditure and stagnation.
Correcting the wrongs of Zanu PF’s flawed economic policy is a necessary pre-condition to moving forward.
In this regard, upon assuming office, a CCC government will embark on a short-term stabilization agenda upon which our economic recovery program will be anchored.
This will entail restoring macroeconomic stability and fiscal consolidation. Given the current budget deficit, fiscal adjustments will be necessary.
Fiscal adjustments will be achieved through a number of measures including fiscal consolidation by, inter alia, the pursuit of a primary balance and restoration of balanced budgeting, rationalization of expenditure and improving the expenditure mix, building capacity on revenue management and strengthening public finance management systems, taking measures to reduce debt and improving debt management to reduce the risk of inflationary pressures, crowding out of private sector activity and continued liquidity shortages, expediting State-Owned Enterprise reform, rationalization of the public service and the elimination of ghost workers to reduce the employment cost to 30% of total expenditure, expansion of the revenue base through increased productivity and expansion of the economy, for the short to medium term – scrapping the bond note and strengthening the multiple currency regime, Central Bank Reform including the urgent audit of RBZ assets and liabilities, export promotion, narrowing the current account and rationalizing the capital account, accelerating ease of doing business reforms and promoting policy coherence.
Financial Sector Reform
Upon assuming office, a CCC Government will immediately embark on a process to transform Zimbabwe into an attractive financial services centre adopting models similar to Mauritius and Botswana. We will create a vibrant venture capital sector to assist entrepreneurs.
The CCC will introduce policies and incentives to attract international capital into the local venture capital sector with an emphasis on creating new businesses in key areas such as tech, manufacturing, agro-processing, and mining beneficiation, among others.
We will strengthen the existing development banks and institutions through recapitalization programs, bringing back international development finance institutions.
The CCC will implement broad measures to strengthen oversight over the financial services sector by establishing an independent body, separate from the Central Bank to supervise financial institutions.
We will seek amendments to the Banking Act to enhance good corporate governance and strengthen corrective measures and stop measures that prejudice depositors.
Zimbabwe has an ongoing currency crisis that is adversely affecting the economy and resulting in irrational outcomes such as multi-tier pricing and a multi-tier foreign exchange rate. To resolve this, the CCC will adopt both short and long term measures.
In the short term, the CCC will immediately scrap the bond note, return to the multiple-currency regime, rationalize the capital account, increase productivity, and grow the national GDP in order to build substantive reserves for the country.
We will also ring-fence USD bank balances to protect depositors against any further shocks.
The CCC recognizes that in the long term, it is not sustainable for Zimbabwe to continue to use a basket of multiple currencies as legal tender.
We are alive to the fact that the USD does exacerbate the challenges of high-cost structures as well as adversely affect Zimbabwe’s exports.
In the long term, we believe a complete solution to the Zimbabwean currency crisis lies in a currency model built on regional integration.
Central Bank Reform
The CCC will amend Banking legislation to establish an independent Central Bank with a governor, a single deputy governor and a strong monetary policy committee.
We will ensure that the Central Bank sticks to its core function of monetary policy as well as the management of the national payments system.
The CCC will enact legislation that prevents the central government from borrowing from the Central Bank and put an end to murky debt assumptions by the citizens.
A CCC Government will restore a savings culture in the country. We will create an environment that protects the interests of savers.
Citizens must not face punitive measures from the financial system which makes them averse to savings.
In this regard, we will implement measures to promote financial inclusion including for the rural economy, establish a credible Credit Reference Bureau, restore the operation of savings accounts and promote savings instruments including paid-up permanent shares and other savings paper to ensure that savings are at least 25% of the national GDP, monitor fee charges and lending rates to avoid arbitrage and usurious rates, restore mortgage finance facilities, return consumer lending and credit finance.
Fiscal consolidation is one of the most urgent and critical elements of stabilizing the Zimbabwean economy.
In this regard, a CCC government will reintroduce balanced budgeting to limit the exposure of the Government to the Central Bank, rationalize the public service, suspend all costly quasi-fiscal activities, rationalize Government expenditure, build capacity on budget management, expand the revenue base through measures to improve productivity and introduce a citizen portal for feedback on public services.
Conclusion -a CCC Government will create economic opportunities for all
The CCC will promote a market-led, entrepreneurial society that is socially just and inclusive.
This includes policy formulation that will deliberately take into account those who have previously had unequal access to opportunities by reason of gender, ethnicity, region, race and other points of disadvantage.
We will do this mindful of the fact that creating opportunities requires the construction of a stable and growing economy.
This also requires the state to ensure that there is adequate housing, a sustainable and clean environment, food and the realization of all socio-economic rights that will improve the daily life of all citizens.