Part 3
1/20
Zimbabwe and AfCFTA
In the last 2 parts we established;
(i)Trade is the movement of Capital. SA will be the oligopolist leader.
(ii) Zim’s comparative advantage is human capital. Technical skilled labour to be specific.
(iii) AfCFTA is NOT Free Movement of people
1/20
Zimbabwe and AfCFTA
In the last 2 parts we established;
(i)Trade is the movement of Capital. SA will be the oligopolist leader.
(ii) Zim’s comparative advantage is human capital. Technical skilled labour to be specific.
(iii) AfCFTA is NOT Free Movement of people
2/20
In Part 3 I wish to conclude that;
(i) Zim is not ready for free trade. Let alone one that’s oligopolistic
(ii) GOZ remains inward looking protecting a highly inefficient “local industry”. Reminiscent of UDI.
(iii) Diaspora population explosion will rescue Zim
In Part 3 I wish to conclude that;
(i) Zim is not ready for free trade. Let alone one that’s oligopolistic
(ii) GOZ remains inward looking protecting a highly inefficient “local industry”. Reminiscent of UDI.
(iii) Diaspora population explosion will rescue Zim
3/20
While it is true that Comparative Advantage (CA) can lead to competitive advantage is worth considering comparative DISadvantages of a country.
This stark analysis can then help a country realize those things it does that are uncompetitive. And perhaps avoid.
While it is true that Comparative Advantage (CA) can lead to competitive advantage is worth considering comparative DISadvantages of a country.
This stark analysis can then help a country realize those things it does that are uncompetitive. And perhaps avoid.
4/20
Zim politics is one such thing, that puts it at a disadvantage compared to its peers. Ever so much, when SADC economic data is presented it avoids including Zim.
SADC inflation rate of less than 2% always has a footnote excluding Zim. Similiar with rule of law, etc
Zim politics is one such thing, that puts it at a disadvantage compared to its peers. Ever so much, when SADC economic data is presented it avoids including Zim.
SADC inflation rate of less than 2% always has a footnote excluding Zim. Similiar with rule of law, etc
5/20
Take Risk vs Return. The 2017 euphoria is gone. In the latest Oxford Economics/control Risk analysis Zim has the worst Risk/Return profile.
Zim offers one of the highest risks and yet lowest return in Africa.
What does it mean?
Take Risk vs Return. The 2017 euphoria is gone. In the latest Oxford Economics/control Risk analysis Zim has the worst Risk/Return profile.
Zim offers one of the highest risks and yet lowest return in Africa.
What does it mean?
6/20
Trade is about the movement of capital. The risk/return profile of Africa reveals the likely winners of AfCFTA. Countries that provide a healthy return with less risk.
That is how a country like Botswana is redefining itself as a trade/financial hub beyond diamonds
Trade is about the movement of capital. The risk/return profile of Africa reveals the likely winners of AfCFTA. Countries that provide a healthy return with less risk.
That is how a country like Botswana is redefining itself as a trade/financial hub beyond diamonds
7/20
A lot of work on competitiveness is available to show where Zim stands. Zim scores highly on health and primary education, matching SA. This advantage falls away by the time students reach higher education.
See part 2, on how Zim produces useless graduates
A lot of work on competitiveness is available to show where Zim stands. Zim scores highly on health and primary education, matching SA. This advantage falls away by the time students reach higher education.
See part 2, on how Zim produces useless graduates
8/20
Zim overal score is just above Mozambique. But we must be cognizant that although Mozambique is relatively uncompetitive, it offers a better risk return compared to Zim.
Zim overal score is just above Mozambique. But we must be cognizant that although Mozambique is relatively uncompetitive, it offers a better risk return compared to Zim.
9/20
Where does this leave Zim?
The GDP drivers in Zim have been forgotten. The first time I highlighted that Agriculture contributes 9% to GDP my inbox was flooded with all sorts of arguments to proof the contrary.
Where does this leave Zim?
The GDP drivers in Zim have been forgotten. The first time I highlighted that Agriculture contributes 9% to GDP my inbox was flooded with all sorts of arguments to proof the contrary.
10/20
Yet as the debate has raged on it has become clear that Agriculture has a disproportionate share of resources yet insignificant in its contribution to GDP.
Instead of embracing its reality & maximizing. Zim chooses to bury its head in the sand.
Yet as the debate has raged on it has become clear that Agriculture has a disproportionate share of resources yet insignificant in its contribution to GDP.
Instead of embracing its reality & maximizing. Zim chooses to bury its head in the sand.
11/20
There is a moral hazard however, when All of cabinet, senior civil servants and the elite are farmers. They see to it that Agriculture continues to get a disproportionate share of resources. And overpriced commodities.Never mind the comparative & competitive disadvantage
There is a moral hazard however, when All of cabinet, senior civil servants and the elite are farmers. They see to it that Agriculture continues to get a disproportionate share of resources. And overpriced commodities.Never mind the comparative & competitive disadvantage
12/20
Zim needs to embrace its new reality. AfCFTA, whatever it’s shortcomings will expose Zim Agriculture problems. Millers & consumers will happily buy from African competitive farmers than Zim farmers.
The Kazingula debacle is indicative/symbolic of how Africa is moving on
Zim needs to embrace its new reality. AfCFTA, whatever it’s shortcomings will expose Zim Agriculture problems. Millers & consumers will happily buy from African competitive farmers than Zim farmers.
The Kazingula debacle is indicative/symbolic of how Africa is moving on
13/20
While Zim internecine politics takes centre stage.
Service sector now contributes 65% of GDP. Zim is now mostly a consumption society.
Suppose Zim had a cabinet of non farmers. What would this mean in terms of policy direction?
While Zim internecine politics takes centre stage.
Service sector now contributes 65% of GDP. Zim is now mostly a consumption society.
Suppose Zim had a cabinet of non farmers. What would this mean in terms of policy direction?
14/20
The service sector and consumptive society is driven by diaspora remittances.
Zim now receives US$1bn in remittances in the formal channels. Plus another US800m in aid assistance annually.
The service sector and consumptive society is driven by diaspora remittances.
Zim now receives US$1bn in remittances in the formal channels. Plus another US800m in aid assistance annually.
15/20
That means Zim receives well over US$2.5bn from outside its borders.
To contextualise, Zim only exports US$4.3bn worth of goods.
It is evident that remittances sustain the Zim economy. This is a good thing if only policy was in tandem with this reality.
That means Zim receives well over US$2.5bn from outside its borders.
To contextualise, Zim only exports US$4.3bn worth of goods.
It is evident that remittances sustain the Zim economy. This is a good thing if only policy was in tandem with this reality.
16/20
Instead Ian Smith’s inward looking import driven policy remains intact. There is an unholy alliance between Smith’s import industry now in the hands of black elite & government.
Ecocash is punished, while importers are subsidized up to 60%. This destroys Zim capital base.
Instead Ian Smith’s inward looking import driven policy remains intact. There is an unholy alliance between Smith’s import industry now in the hands of black elite & government.
Ecocash is punished, while importers are subsidized up to 60%. This destroys Zim capital base.
17/20
In a decade, Zim will have 7-10m people of Zim ancestry living outside it’s borders. Mostly in Africa.
Unless Zim harnesses this reality, turning welfare support into investment , Zim will not reap the rewards. GOZ policy must address Zimbabweans in the diaspora
In a decade, Zim will have 7-10m people of Zim ancestry living outside it’s borders. Mostly in Africa.
Unless Zim harnesses this reality, turning welfare support into investment , Zim will not reap the rewards. GOZ policy must address Zimbabweans in the diaspora
18/20
Eg remittances must remain in the formal channels. When remittances remain in the informal market they’re not at best use.
Imagine if US$1bn of remittances & aid receipts remain in our financial systems. As direct annual injection. This can easily grow Zim savings base.
Eg remittances must remain in the formal channels. When remittances remain in the informal market they’re not at best use.
Imagine if US$1bn of remittances & aid receipts remain in our financial systems. As direct annual injection. This can easily grow Zim savings base.
19/20
To conclude the series. Zim is not prepared for AfCFTA. It’s inward looking policies & politics is not CAPITAL friendly. Trade is about the movement of capital.
However Zim skill base is it’s CA. It must maximize on this.
Build confidence in the financial system...
To conclude the series. Zim is not prepared for AfCFTA. It’s inward looking policies & politics is not CAPITAL friendly. Trade is about the movement of capital.
However Zim skill base is it’s CA. It must maximize on this.
Build confidence in the financial system...
20/20
... and ensure our biggest export, human capital’s earnings come back to Zim and become a savings base.
With a diaspora population explosion in the next decade, Zim can be a hub for their savings. Whence rebuild a post UDI industry!
The End
... and ensure our biggest export, human capital’s earnings come back to Zim and become a savings base.
With a diaspora population explosion in the next decade, Zim can be a hub for their savings. Whence rebuild a post UDI industry!
The End
You can find Part two here
https://twitter.com/baba_nyenyedzi/status/1389460931743211523
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