National Development Strategy 1 is woefully inadequate

THE National Development Strategy (NDS) 1 is woefully inadequate in view of factors that have come to light. These factors are the Africa Free Continental Trade Area (AfCTA) and the recently released provincial economic outputs (provincial Gross Domestic Products).

NDS 1 missed AfCTA impacts

AfCTA came into effect on 30 May 2019, launching the first phase of its implementation roadmap. AfCTA is a continental trade liberalisation agenda that envisages the removal of all trade barriers in the form of both economic and non-tariff barriers. Economic trade barriers would include trade restrictions such as tariffs and quotas. Non-tariff barriers would include infrastructure (physical and digital), corruption at the borders, inefficient border operations and lack of support for vulnerable trade groups such as women and the youth.

The first phase focuses on agreements on trade in goods and services. The second phase is expected to go into operation on January 1 2021. The second phase is about putting in place national investment plans, competition policy and intellectual property rights.

The bigger picture underlying AfCTA is the establishment of an African Single Market, African Monetary Union and an African Political Union. This bigger picture is often lost in the discussions on AfCTA. The African Union’s Agenda 2063 sets 2023 as the timeframe for the establishment of an African Monetary Union. It is not yet clear if that 2023 target will be met.

Zimbabwe has ratified the first phase of AfCTA. Zimbabwe negotiated for a special dispensation in terms of implementing the opening phase. Zimbabwe was placed in a group of seven countries—Djibouti, Ethiopia, Mozambique, Malawi, Saharawi, Zambia and Zimbabwe (Demmszz)—that asked for a phased reduction of economic tariffs across a range of goods and services. The Demmszz were granted permission to fully liberalise trade (complete removal of tariffs) on non-sensitive goods and services in two steps: 85% liberalisation over 10 years and the remaining 15% over 15 years. On sensitive goods and services, the Demmszz are expected to fully liberalise in 13 years. The rate of liberalisation will be linear, meaning tariffs will be reduced in equal quantum over the timeframe until tariffs are zero.

By ratifying AfCTA, Zimbabwe has participated in the creation of a significant economic institution. It is an irony that Zimbabwe has failed to factor in the likely impact of AfCTA and the African Monetary Union prospect that falls within the period of the NDS 1. That omission is huge enough to put into question the adequacy of NDS 1.

There are several areas coming from AfCTA that threaten te NDS 1. This article has sampled four.

Provincial GDPs expose NDS 1

NDS 1, for all its talk on devolution, has failed to be upfront that there is a serious level of inequality in terms of economic output and wealth distribution across our provinces. We have a clear dichotomy: rich metropolis and poor countryside. The divide is startling: Harare and Bulawayo have per capita GDP of US$3 614 and US$3 048, yet the poorest province, Manicaland, has a measly per capita GDP of US$743. The metropolitan provinces have combined average per capita GDP of US$3 331, compared with the combined non-metropolitan provinces’ average per capita GDP of US$1 063. The difference is astounding; metropolitan provinces have a GDP that is 3.31 times as big as the non-metropolitan GDP. It is even more astounding when the metropolitan provincial GDP is compared with that of the poorest provinces. Metropolitan provincial GDP is 4.48 times that of Manicaland, 4.24 times that of Mashonaland Central and 4.24 times that of Masvingo.

We have a situation where X provinces would be classified as low-income provinces (less than per capita Gross National Income—GNI—of US$1 035) : these are Manicaland, Mashonaland Central, Masvingo and the Midlands. The rest are lower middle-income  provinces (per capita GNI of US$1 036-US$4 095). The metropolitan provinces are 22% away from the upper middle-income classification.  The non-metropolitan provinces need to grow their economic output by at least 185% in order to reach the upper middle-income classification. For the poorest province, the hurdle rate is even higher, if not daunting. Let us take Manicaland as an example; this province will need to increase its economic output by at least 451%.

There are serious questions to be asked. How does Manicaland become the poorest province with a measly per capita GDP of US$743 yet it produces diamonds, tea, timber, fruit and dairy? How does Mashonaland Central, a rich farming area, for its potential has only a shocking per capita GDP of US$784? How does Masvingo, with vast area once known for ranching and the vast sugar estates and a province with the largest irrigation infrastructure and drainage density, post a sickly per capita GDP of US$820?

There are two reasons: the decimation of our agriculture through stonewalling of agricultural reform, more poignantly in the area of security of tenure and the bambazonke (all-powerful) pull of the metropolitan provinces.

The conception that as a country we need real economic output of at least 5% per annum is too simplistic and not very useful as far as strategy is concerned. This global real GDP growth hurdle rate applies more to the metropolitan provinces. The non-metropolitan provinces need much higher real provincial growth rates of 9-12% per year. Our NDS 1 is not configured to drive balanced economic growth despite its commitment to devolution. What we need are provincial National Development Strategies with clear real growth hurdle rates. If this is not done, we will have richer metropolitan provinces and even poorer non-metropolitan provinces. We risk having upper middle-income Bulawayo and Harare surrounded by a national sea of poverty. This is not shared growth.

The way our NDS 1 is configured will widen economic inequality in Zimbabwe. To remedy this strategy defect, agro-food and mineral value chains envisages by the NDS 1 need to be at the provincial levels where the primary production occurs. If we do not keep our eye on this one, the natural forces of agglomeration will result in upward value chain development being concentrated in mostly Harare.

I am afraid to arrive at an unpalatable conclusion:  NDS 1 needs fundamental re-engineering. The ink of NDS 1 is wet. Let us accept that we made two fundamental omissions: AfCTA and the provincial economic disparities. The national scoreboard, on per capita GDP needs to be disaggregated to provinces so that our strategy focusses on moving the economic output up—the current provincial per capita GDP baselines show that NDS 1 needs to me made more robust than it currently is.