Chris Chenga
It is conventional for socioeconomic entities to have a mission statement and a vision. Both, or either one of these, are typically brandished on the entity’s logo and official documentation. This is behaviour so common that it may be taken for granted. Why are entities conditioned as such? It is my observation that the most impactful leaders in governance, industry, and society tend to personalise this trait of long term foresight and identity as well. In casual conversation with one esteemed industrialist turned policy advisor, she remarked to me “Nothing with expected short term yields is worth my time, but that which requires sustained focus and commitment becomes worthy. Give me a long term ambition. If it yields profound impact, maybe that i’ll do. Short term goals are only relevant as process rectifying and visionary alignment.” Under a layer that could be interpreted as vanity, I did pick up an admirable character commitment, at least substantive enough to make reference to Zimbabwe’s supposed socio-economic outlook. Grand Prizes 1st Prize: Trip to Paris France 2nd Prize: Trip to Capetown South Africa 3rd Prize: Trip to Victoria Falls Consolation prizes 2 x iPhone X 2 x Samsung galaxy Tab A6 3 x USD250 Loaded MasterCard prepaid card Monthly prizes 20 x power banks 1 x USD50 loaded MasterCard Prepaid Card Volatile markets and rates do not signal good leadership It was a campaign narrative and post-electoral promise to turn Zimbabwe into a middle income economy by 2030. Indeed, much policy justification and structural reform is stamped on the proposition that decisions are guided by a middle income outcome to be realised eleven years from now. However, long term foresight and identity requires continuous clarity. What is middle income? The category itself is as diverse as whoever is computing or labelling it. Recently the Pew Research Center just issued a report of Africa’s middle income as a daily income of between $10,01 and $20. The World Bank defines middle income in three strata of ranging from lower middle-income economies – those with a GNI per capita between $1 006 and $3 955; and upper middle-income economies – those with a GNI per capita between $3 956 and $12 235. So take a pick which category Zimbabwe aspires to be by 2030? Moreover, will it be nominal or real dollars factoring inflation? With the recent rebasing of Zimbabwe’s GDP, does that mean the nation is closer to being middle income than three months ago? The emphasis is not to ridicule the notion of middle income aspiration, rather to gesture that such a vision remains vague, and can be continuously refined. Middle income may not even be rigidly defined by GDP or income figures. Perhaps it could be better achieved in a context that prescribes a certain standard of livelihood; after all similar GDPs and incomes are relative to quality of livelihoods as reflected by access to essentials such as education, sanitation, ease of mobility and various metrics that more directly speak to a country’s welfare.
The value of such inquisition is to realise that everyday impact often comes from an ever crystallising vision. As a nation continuously crystallises its long term ambition it really starts to perceive immediate policy and reforms as merely the process rectification and visionary alignment that they simply are. They are just a means to get to continuously defined aspiration. Currently, most policy and reform in Zimbabwe are interpreted as isolated actions, with each one uniquely baring vastly different eventualities for the country. This is what is presently causing unease especially when each Ministry gives a press release, let alone macro-economic policy announcements like a fiscal or monetary policy statement. This is what is causing volatility in markets and rates at respective policy announcements. Policy and reforms are not meant to be certain; otherwise markets wouldn’t take varied positions of expectation. However, policy and reforms are expectedly responsive. That means a question for markets shouldn’t be “where is the next policy meant to take an economy?” Rather, the question should be “how will the next policy keep, or steer an economy back to its intended trajectory?” With this context, policy and reforms can then be perceived as process rectification or visionary alignment in short term cycles that are to be expected along the path to a middle income aspiration by 2030. In Zimbabwe, policies are significantly isolated in market concerns as shown by volatility in days before and subsequent to policy announcements.
At the last quarter of 2018, capital markets moved more than 80% the week after the monetary policy statement, and parallel markets moved over 150%. This volatility tells how policy is perceived in isolation, void of a comprehensive visionary alignment.
An IMF working paper published in 2000 titled “Selected Issues Concerning Monetary Policy and Institutional Design of Central Banks” touches on the problem of time inconsistency in monetary policy, and the coordination problem between fiscal and monetary policy.
These two subjects have been a visible ache since Mnangagwa’s administration. The paper highlights how difficult it is for economic participants in an economy where monetary policy is not coherent over time and does not seem to stick to a long term prescribed vision. This is due to matters of institutional design that make process rectification and visionary alignment hard for the central bank to effectively transmit intend monetary policy, and more importantly, also due to poor coordination with the fiscal policy. Zimbabwe’s monetary and fiscal policy agendas seem to be on a vague trajectory, that’s neither predictable nor accountable. Resultantly, both policy regimes seem to be in discordance with one another. It should be worth a leader’s time then to frequently refine the vision, and thoroughly ensure that the fiscal and monetary regimes are perceived as merely process rectification and visionary alignment.
When President Mnangagwa speaks of a middle income economy by 2030, the monetary and fiscal policies at any moment within that time frame have to resonate with a clearly defined eventual outcome. As markets wait for yet another Monetary Policy Statement to be given this afternoon, perceptions are expectant of yet another isolated policy intervention. It is more preferable that markets start to wait for expectedly responsive policy interventions that keep, or steer an economy back to its intended trajectory.
