Mungai Lenneiye, founder of Udugu Institute
A FORMER World Bank country representative this week called on government to rally all critical stakeholders to get the economy out of its current quagmire, saying successful implementation of a government-crafted Comprehensive Country Financing Programme (CCFP) required support from both citizens and the corporate sector.
Mungai Lenneiye, founder of Udugu Institute and former World Bank country representative to Zimbabwe, spoke during a Top Companies Survey 2015 awards ceremony at which he was the guest of honour.
The theme for this year’s Top Companies Survey was “Enabling Economic Growth”.
The Top Companies Survey is published by the Financial Gazette and sponsored by Old Mutual Zimbabwe, the country’s largest financial services group.
Lenneiye spoke about the need for visionary leadership to take the country out of its current economic woes.
“Those leaders who develop a strategy based on a realistic ‘reading’ of the environment and then excite their followers about the resulting vision often produce a leadership product that defines success in implementation and fosters societies characterised by successful households, companies, and nations,” said Lenneiye.
Giving his perspective on the economy, Lenneiye said Zimbabwe’s 2015 economy was characterised by its relatively small size measured in gross domestic product (GDP) numbers (below US$15 billion); a large external debt that is almost the size of the GDP (just over US$10 billion; low levels of exports compared to high levels of imports; a collapse in agricultural as well as industrial production; poor implementation of well-written, but often unrealistic plans and programmes; high levels of informality (over 80 percent) of the economy; and the absence of a non-partisan national vision on several critical economic issues (in particular land reforms and indigenisation policies).
“Honourable (Finance) Minister (Patrick) Chinamasa, as the government economic spokesman, has given us a positive read, and gives us three critical features of the road ahead,” said Lenneiye.
He highlighted these as including a promise by government to live within its means by reducing the cost of its workforce; clearing its arrears to international creditors; engaging creditors (banks and developed nations) to clear arrears though concessional and bridging loans on the back of a rapidly growing economy based on a successful formulation and implementation of CCFP.
Lenneiye pointed out: “The success of this future demands that there is consensus among citizens and leaders from corporations and government on the contents of the CCFP; and a binding contract to support its implementation.
“These measures should set the country on a path of economic growth, and with the right support could rapidly bring about inclusive growth.”
He added that, while the CCFP could bring about national growth, more was needed from the corporations of today if they wished to be part of that future.
“When Zimbabwean companies look at their production infrastructure, they see dilapidated buildings and obsolete machinery. They also see their skilled labour force dwindling as individuals emigrate in search of greater economic opportunities. This is no different from what companies in Europe, America, and Asia saw at different times for over a century.
“In some of these respects, the world looks the same, but it has changed radically in many other ways. Although human needs, when it comes to food, clothes, housing, transportation, health, education, entertainment, and many others have largely remained constant over the last 50 years; the methods for their production and consumption have in fact changed beyond recognition,” said Lenneiye.
He said the Zimbabwe of tomorrow was young, with over half of the population being under 35 years old, but factories and products were still old.
“It is therefore no longer sufficient to replace obsolete equipment with new ones to just produce old products; the new generation is demanding an overhaul of consumption patterns. It is also not necessary to knock down dilapidated buildings if they can be renovated to house new systems that foster and bring about new production relations in a world that has become highly differentiated in the division of labour. It is equally not necessary to insist that Zimbabweans can only contribute to the economy by coming back home when we live in a world with lightening fast communication and movement of both ideas and products.
“These Zimbabweans, both at home and in the Diaspora, are, on the whole, well-educated and capable of designing and managing the needed physical infrastructure (be it power, roads, communications, and others) on which the digital revolution will run. They are part of a global generation that expects even greater changes in the way they read, seek health care, consume foods, earn a living, communicate, entertain, and generally live wherever they are.”
Lenneiye said it could be said that innovation and adaptation across all value chains were likely to be features of survivors, while dinosaurs exited “the Zimbabwe entrepreneurial savannah”.
“In this, Zimbabwe is no different from other countries around the world where changes have been enormous — for instance the global service industry now makes up over 60 percent of GDP, way ahead of agriculture and manufacturing. It is not that we produce fewer goods, but this change is due to the greater integration of service provision into the delivery of goods in a way that was unimaginable just two decades ago — bookshops are dying and so are newspapers; while the production unit costs have dropped as service charges have risen to change this balance between costs in production, distribution, marketing, and other aspects of bringing products to the consumer.
He said the young generation in Zimbabwe, and indeed Africa, were making such radically different demands on entrepreneurs that an overhaul was needed in the country’s entrepreneurial thinking.
“On the one hand, we can opt to be like the Fleet Street workers using a 100-year old Caxton printing technology in the face of digital printing; or on the other hand, the coal miners of South Yorkshire in the face of new energy demands by industry. These two industries became extinct before we entered the 21st Century,” he warned.
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