Zimbabwe is no stranger to economic blueprint documents which sometimes come with what can only be described as eye catching names. So the new strategy document being simply named national Development Strategy 1 puts us in somewhat unfamiliar territory. The NDS1 is the first of two 5 year plans that are intended to put legs under the much talked about vision 2030. It will run from January 2021 to December 2025. The document is large, over 300 pages all appendices included and there is a lot to digest. For now we can look at highlights as we comb through the full document to garner how much to expect from the new document in town.
The first clear goal of NDS1 is to foster macroeconomic stability as a platform for growth. In English, NDS1 wants to improve the economy and boost Zimbabwe to a middle income economy as measured by GDP per capita (average income per person). The document states 6 vague goals towards this end;
- Achieve and sustain inclusive and equitable Real GDP growth;
- Promoting new enterprise development, employment and job creation;
- Strengthen Social Infrastructure and Social Safety nets;
- Ensure sustainable environmental protection and resilience;
- Promote Good Governance and Corporate Social investment; and
- To modernise the economy through use of ICT and digital technology.
NDS1 one is not all vague goals though. It has clearly stated and quantified macroeconomic objectives which are ;
o Achieve an average annual real (USD) GDP growth rate of above 5%;
o Maintain fiscal deficits averaging not more than 3% of GDP in line with SADC
o Achieve and maintain single digit inflation;
o Increase international reserves to at least 6 months import cover by 2025;
o Establish a market determined and competitive foreign exchange rate regime;
o Maintain public and publicly guaranteed external and domestic debt to GDP at
below 70% of GDP;
o Maintain a current account balance of not more than -3% of GDP;
o Create at least 760,000 formal jobs over the five-year NDS1 period;
From these what grabs the attention most is the humble jobs target by historical standards of other economic blueprint documents. We’ve had promises of millions of jobs before so a target below 1 million for 5 years shows a sobering up of the policy rhetoric. Having measurable targets is a great thing. As we celebrate this we should perhaps recall that ZimASSET also had measurable targets . What matters of course is the plans to achieve those targets. To their credit, the government had gone some way towards achieving some of these objectives through the Transitional Stabilisation Program and as recently as 2009 to 2013 some of these were obtaining in the economy.
Monetary Policy targets
The document buttresses the macroeconomic policy thrust they have also included specific Monetary Policy targets including;
o Reduce inflation to single digit of between 3% – 7% by 2025 in line with the
SADC Macroeconomic Convergence Target;
o Align reserve money growth to levels consistent with low and stable inflation
as well as exchange rate stability; and
o Eliminate quasi-fiscal operations.
Reducing inflation in Zimbabwe is nothing short of a Hurculean task. Reducing it to single digits will take a lot. To achieve this in the past Zimbabwe had to abandon the Zimbabwean dollar and adopt multiple currencies. Lessons have been learnt and the work of reducing inflation has started with inflation currently at 471% after peaking at over 800% year on year only 4 months ago. The elimination of quasi fiscal operations and containment of reserve money growth are key these results and will need to be the focus going forward.
Some key points
There are issues mentioned in the document that can be described as cross cutting issues. These include issues expressly mentioned as cross cutting such as gender, youth, arts and recreation to key concepts of public sector transformation and integrated results based management. In public sector transformation the usual terms such as Public Private Partnerships and Privatisation were mentioned but also included the mention of commercialisation of State Owned Enterprises. This in my opinion is a much more viable concept than the latter. The document also makes mention of the economic growth being premised on the growth in mining and agriculture which is not certain by any measure.
All plans need funding and such a big plan, spanning 5 years this is one of the biggest questions. The document states that funding will be from fiscal revenues, loans, grants, public entities own resources and private sector resources including, Public Private Partnerships (PPPs), Foreign Direct Investment and Diaspora investments. All valid sources I suppose but let’s be honest that is too vague for funding sources for such a huge plan. This is not new to us, we have had many plans with vague funding and we know how they have gone.
A 5 year plan, the first of two, is a huge undertaking and we have to be fair and accept that coming from where we’re coming from expecting a perfect plan is a bit much. We will have to see what comes out of deeper analysis of the details of the plan.