|Mr Biti Photo courtesy
Zimbabwe Finance Minister Tendai Biti's recent budget contains important measures capable of wooing entrepreneurs, small businesses and the Diaspora for sustained economic recovery. With unemployment rate over 90%, Zimbabwe desperately needs triggers for driving the economy forward.
“What this budget simply means is that it's time to ship my 'gonyet', my tractor, my F250 and the rest of the equipment lying idle in my garage for all this time. According to Mr Biti's budget, I only have to worry about shipping costs.” said an excited Norman Phiri, who has been in the Diaspora for close to a decade. Mr Biti's budget succinctly makes the case for Diaspora returnees to seriously consider investing in the homeland.
Measures contained in the budget such as abolishing import duties on capital investment equipment and technology-related products, for instance, computer hardware represent massive opportunities for entrepreneurs and small businesses who are responsible for creating new jobs. Numerous downstream industries will also be created in the process. The effects on the national economy will be felt immediately.
While some have selfishly argued that removing or reducing import duties on computers, cellular handsets, telephone sets and printers, will hurt local industries, such thinking wildly assumes that local industry was functional. When was the last time Zimbabwe produced computers or components for computer manufacturing? Mr Biti has simply created more opportunities for more people. The recently announced budget promotes the much needed entrepreneurship, one of the key engines for economic growth.
In the USA, small businesses form the backbone of the economy as they create most of the new employment (over 90% of all new jobs) and represent more than 50% of all private workforce. According to the US Small Business Administration, small businesses represent 99.7% of all firms. US small businesses constitute the world's second largest economy, trailing only the US.
In that regard, the government of Zimbabwe has to do more to promote small businesses. With an 'over-banked' economy for its size, Zimbabwe must encourage the emergence of a bank specifically focusing on lending to small businesses and individual entrepreneurs. There is need for a fully-fledged agency that focuses specifically on entrepreneurship and small businesses.
Amid a backdrop of a mildly improving business environment (a direct product of lukewarm political progress), there is guarded optimism from many Zimbabweans in the Diaspora who are feeling the urge to play a meaningful role in redeveloping the homeland. While Mr Biti has set the right tone, one would expect that by now the government of Zimbabwe has already put in place a robust mechanism to mobilize Diaspora to leverage on its human and financial capital. Zimbabwe's devastating brain drain has to be counteracted by a deliberate brain gain campaign.
Some of the practical steps to raise the much needed cash include issuing government securities with attractive yields specifically targeting Diaspora. There was a similar program in Sri Lanka where government managed to raise more than US500 million from its Diaspora by way of government securities.
Another route is the equivalent of India's Persons of Indian Origin card (PIO) which offers preferential deals that attract Indians in the Diasporans back to India. Upon purchase of a $1000 card, members get preferential deals for instance, import duty exemptions for a long period, discounts, employment opportunities, as well as VIP treatment at Customs Boarder Posts.
Finally the government has to swiftly communicate the admissibility of dual citizenships as these offer practical advantages to Diasporans who are still skeptical about Zimbabwe's political stability.
Mr Biti's budget is perhaps the most compassionate in history. He has budgeted US$32 million to take care of 'vulnerable groups' such as child-headed families. In a country where its poor (seven million according to UN estimates) are largely surviving on donations for food from international aid agencies, allowing food imports duty-free is the humane thing to do. Isn't it weird that the farm grabs has caused more misery and starvation since they were officially started back in 2000? All the same, Biti allocated US$146 million to help with inputs for small scale farmers. However the future of Zimbabwe's agriculture lies in mechanization, not subsistence farming.
At this point the only criticism for Mr Biti's budget is its apparent lack of imagination on measures of how to spur growth of the export sector. But overall Mr Biti's economic growth trajectory of 3.7% is feasible.
Mr Biti's efforts are meant to reverse the impact of economic meltdown and to promote more economic activity that will see more currencies circulating. At the same time, Prime Minister Morgan Tsvangirai is fastidiously working to build a coalition of nations that will rally around the cause of Zimbabwe's economic revival. Reconstruction money is on its way as long as political saboteurs like Mr Moyo are not allowed to prevail.
All that is required in Zimbabwe at the moment is the emergence of a steadfast political will. It is our sincere hope that men and women of Zanu PF will for the first time, desist from flirting with the politics of self-destruction.
By Dr Paul Mutuzu
National Vision Insitute